Markets Slump After Record Day

Mike Santoli analyzes the morning business headlines.
7:54 | 05/08/13

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Transcript for Markets Slump After Record Day
Certainly investors are going to be looking to see what will happen today futures -- this morning but that record -- yesterday on the Dow closing above 151000 for the first time ever. Climbing up more than seventy points in afternoon trading today though markets possibly a little more cautious so want to bring in Matt Mike -- from Yahoo! finance to break -- the top business headlines. For this Wednesday morning but the -- you. Morning -- start on the new credit report showing that Americans are strange and borrow again. This good news I mean it's always good to have a little bit a credit on our books but at the same time. Are we still remembering our lessons that we learned. Yeah I think it is generally good news it's been slowly coming back for a while as I did the consumer is is really taking a little more debt. But I think it did accelerate recently what it really tells us in a good way is that bad. So called deleveraging when people based McDonald's wasn't too much debt they tried to will down. It's largely run its course for those people who still have access to credit the cost of servicing the debt outstanding right now is that. Twenty year lows so rates are so low and people -- their balances down -- -- That right now they can actually afford very easily. To take on a little more -- which is generally positive thing obviously you don't wanna go -- route four on a limb on an individual basis and you don't wanna see the whole economy. -- weigh in too much and -- but right now I think it's in a good zone. And obviously banks make money when they lend money to banks make money when they lend money to people -- -- -- on this Wednesday noted. But the fact of the matter is they also have to kind of pull back a little bit and any kind of understand what the risk of default might be are they eager to start reading out some cash. They are on -- Eager in terms that they usually used to be before the the really excessive practices they think of 2005 and six and such so I do think that -- at the ready. -- who qualified -- the problem really has been tightened in recent years that so many consumers and homeowners had their credit impaired. That they simply could not qualified based on -- new standards right now I think -- Are getting slowly past that one house prices come back as they are slowly now that also helps -- in the value of the collateral for most -- borrowing goes up so. Yes that banks are there but they're not going to I don't think. Get quite as aggressive as they did several years. Interest rates are near zero but at the same time -- the Fed is also concerned about missing its inflation targets yet. -- -- in -- not ha -- long -- because of a concern is this. While it's a concern. Very long term on an immediate basis people would wonder why the Fed wants inflation to be higher than it is right now which is what they're doing. Basically. -- the Fed wants to keep inflation somewhere in the 2%. Zoned core inflation for most goods around 2% a year and it's been below that recently in the -- that's why one of the reasons that the Federal Reserve. Is so intent on keep funneling money. Into the economy buying more bonds and basically try to keep. Money flowing very easily. Throughout the economy because they want to have that level of economic growth that would engender some. Inflation out there basically they want to fight at all costs against deflation which is a steady decline. In the general price level which Japan has been trying to get -- -- for twenty years. There's always that that that tricky balance -- -- I -- talk about try to permanently gets us and good trade data coming out. Fourteen point 7% growth for the country some -- -- say though those numbers today got to dig a little bit deeper to find out what's the truth behind them. Right. Now there's always a little bit of suspicion about whatever official numbers come out of China in this case seems like -- -- a bit more question about it because. Basically that the issue is are they counting as exports what's really. Flows of money back and -- to buy and sell the Chinese currency. So essentially it seems is it because trade -- currency is restricted. There might be some transactions being counted as trade of the selling of goods to the rest of the world when in fact it really -- it's just kind of money being imported from the rest the world. To own the currency so. We don't really know kind of how much is one how much is the other I do think though in general it's a positive number it seems like global demand for going to stabilize at least. Even if this wasn't on a one month basis something to get excited about it seems as if the Chinese slowdown. Maybe has moderated. At this point -- some earnings came in after the bell yesterday roster with Disney of course ABC's parent company. Other numbers look for Disney. Very very good actually the company -- have filed for for a while now so it seems as if it's kind of the same story. Cable networks doing very well showing solid growth there -- probably some of the best cable franchises. The theme parks were a bright spot as well I'm interestingly in the the company said this summer bookings are running very strong people are spending more depart so those two things. Combine obviously with some studio success relative to last year Iron Man most recently was not in these quarterly numbers. But they have had -- tail wind of some some pretty good animator or superhero type features I do think in general it was a solid a solid story that. -- what about JC Penney because it's always been fascinated to see what's thing going out the top that today. Booted out -- CEO and -- they're kind of Ream who region hearing their price structure and their overall approach to the consumer how they're looking. It's a tough. Today I mean you know they had they had -- source -- -- climbed 16% this a preannouncement byways of their official earnings are coming out next week. But they did say that seems -- -- sales declined 16% which is steep but the -- again evident -- -- 5% at last report. They really are -- in this delicate position right now of trying to reintroduce our customers who work there. Merchandise proposition is and -- gonna have sales and yet half the stores are so. Are under renovation -- have been renovated in different format so I really feel like to have a tough. Road to try and persuade customers to give them another shot. While also not necessarily delivering the same. Saying to those customers when they show for the stores so right now it looks like they have a financial lifeline they didn't get some creditors to say okay we have money. Backing you get you through this year but they're burning cash at a remarkable rate trying to rush through this renovations. So it seems like you could -- I mean this is not. An area where struggling retailers tend to have a long time to figure it out I mean is -- enough other competitors out there. Looking each -- that I do you think they're they're looking at a runway and several months. Not years trying to turn it around. Wow I had no idea was that that short term on that but of course at the same time America always loves -- comeback story so sickening if -- if they can do it quickly they can make that. An eleventh hour move through certainly -- to help -- I have less Ellen -- little bit about Tesla because -- motor company there making a profit obviously selling a lot of those electric cars very high price electric cars -- the music and the average -- 130000 dollars and that that not for everyone on their wish list but they're making some cash now. They are. It's actually in. -- impressive that they are at this stage of their development obviously it's still you know kind of -- -- product still very young company. But they are making a -- a profit now. They're doing it in part by sort of selling some emissions credits and basically pulling in cash that way they don't need those emissions credits because they have electric cars. So I do think that you know on some level the short term basis it's a little bit gimmicky. But just to the point that they're getting to profitability and they're getting to some kind of critical scale with production. Is impressive its -- -- in the market right now this is one of them that most. Fiercely fought over his companies basically have these these sort of cultists who believe it's the future -- -- by the people say this ridiculously overvalued niche product. And their companies not gonna have a long life ahead of -- -- -- -- real battleground stocks and -- all over the place constantly. And if he can make some money along the way all the better right people who are trying the -- -- -- -- -- -- -- -- -- Mike the Dow's down about 28 points at 151026. My -- -- -- from Yahoo! finance might have a great Wednesday all right thanks like.

This transcript has been automatically generated and may not be 100% accurate.

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