Is The Market Rally Based in Reality?

Mike Santoli analyzes the days' business headlines.
3:00 | 02/12/13

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Transcript for Is The Market Rally Based in Reality?
Latest in business and -- And you're watching live coverage of the opening bell on ABC news now ringing the bell this morning not representative of PepsiCo -- -- maker she -- A. And they have -- the opening -- for this Tuesday February 12 hello everyone I'm -- what. -- in New York futures were mixed this morning many companies posted positive fourth quarter earnings today including Coca-Cola and Michael court. But it looks as though investors don't want to make any big moves before they hear president Obama's speech tonight in the state of the union and help explain the top stories of the day we are joined now by Mike -- from Yahoo! finance good morning like. Morning -- some I don't -- Start with a rally we've seen over the past month or so of course that rally has slowed down a bit in recent days but some analysts are predicting eight. That actual reality adjustments. After this summer what's the basis for that. Well I mean we've had this kind of what's felt like an -- -- higher and -- people -- gotten pretty enthusiastic about the market some concern out there that maybe people are getting -- confident that all we can do is go up with this markets of this I'm concerned that if we don't pull back and kind of -- set some expectations with a little bit a downside. Action before too long and we can have one of these matters -- the market just kind of continues to inflate until we get a real shock and a lot of people pointing to. Evidence in the past that you know when you really build a big gain into the some -- in 1987. When you're very vulnerable to something very jarring which in that case was -- crash it's unpredictable inherently they say that there might be a crash. But I do think that people are getting a little concerned about how happy a lot of the public getting about the market so far. -- Americans are just really good at that at that exuberance -- a -- Now I want to delve into specifics Tulsa tap Tesla Motors founder and CEO -- -- -- has been in the news lately and tell what's going on. While the New York Times did a test of one of Tesla electric cars now this is a -- is a billionaire who has this Tesla Motors is is really -- huge aggressive push. Two to commercialize. Electric cars -- -- set a souped up looking sports cars as well as regular kind of transportation. -- -- -- -- -- -- In which it said he did not fulfill its promise to range how far to go on a charge. Under ideal conditions. Now mosque is arguing any got on Twitter he's going to be running a blog post apparently saying that the time did not correctly. Do the -- basically not follow instructions didn't -- it fully. I did not -- -- the proper driving conditions so there's this kind of public dispute. About the merits of this test of a car that really it's kind of high stakes situation for Tesla -- -- -- much of the public gaze is waiting for all these cars but it seems as if he wants to really make an issue of this particular test new attacks happen in the past as well so is there any confirmation -- -- -- a New York Times did get things wrong. There's -- accomplish in the time says that they stand by the -- backs -- the test says that they the person -- the reporter who tested. The car actually followed repeated instructions of -- represented -- so wasn't as if they just. Took possession in the car -- on their -- so it's unclear exactly whether there were discrepancies musk says he has data logs. In -- inside the cars that kind of tell. How was operated on whether it was fully charge. Because this -- -- tell us anything about the future of electric cars and electric car companies. I think what it tells -- is it's not finish the technology is not -- to we can just sort of assume that it operates as promised not just for -- -- -- just in general that it seems like you -- for the cost reasons or for reasons of convenience. And practicality and we're not there yet -- -- some ways to go all right now. The British bank Barclays says it wants to change direction but it doesn't sound like that's going to be a good thing for its employees -- what's going on -- Well they did -- -- the British banking industry is insuring -- they've had scandals Barkley says have big fines levied upon it because they were one of the banks said to be rigging an official interest rate Libor. They've also just had their business. Kind of suffer because banking volumes in general have have declined that -- British -- -- global ambitions but this is one of them to become. These mega investment banks and commercial banks so what they're doing is they're retrenching a little bit they're saying we have to scale back -- -- -- going to be cutting. 3700 jobs about half of those from their investment bank half of them outside of Britain. In the in the retail bank. So it seems as if they have to kind of pull in the horns a little bit it's something going on. Across a lot of the British banks as well as some of the US and other continental European banks is basically the industry got too big for the opportunities out there and now having a bit of a reckoning. A lot of unemployed bankers on the street -- right now. What about what actually finally push them to make this dramatic -- of a cut. Well ahead a big loss in the latest quarter more than a billion dollar loss and and really they they -- they lost the CEO. Following a Libor scandal and essentially the opportunities are not there they had inflated there they're cost too far beyond what they feel like they -- they can actually -- in -- -- business. I think and I finally -- the state of the union is tonight -- wanted to get your opinion on what you think President Obama needs to say tonight. Well I think. When it as regards the economy and and the budget in and what the markets care about they're going to be listening very closely to how he characterizes. These Slade an automatic. Government budget cuts known as the sequester -- -- just gonna make it about. You know kind of try to pitted on the Republicans if in fact it goes through -- are going to be some kind of longer term kind of budget framework proposed. We're hearing these -- early reports that he wants to. To say that -- -- spending -- should not be the sole focus he wants to continue to press this theme of balance where you get tax revenue. As well as long term spending cuts so I do think one of things of people -- listening for genuine specific tax reform proposals. Perhaps changing corporate tax rate structure eliminating deductions a lot of these things that have been on the table. Another thing I think you want to keep an ear open for is any references to energy production. So obviously the president has been a big advocate of alternative energy and at times he's kind of thrown. Money and rhetoric behind -- green energy. But actually what might be interesting is is whether he says or doesn't say anything. About promoting domestic oil and gas production through existing subsidies or maybe even. Further ones or cutting them so I do think that energy might be one thing -- people aren't talking about too much just yet. You bring up energy has the president's set -- thing one way or the other about fracking. Well. In general I believe he sort of says you know it's great that we now have this domestic energy source somewhere on the way of becoming a little more self sufficient. But of course very concerned about making sure we do the right way and don't hurt the environment -- badly along the way so essentially. Regulated but do it itself I think the way we're approaching it just for as far as the White House is concerned -- do you think. You know we we recognize this is a big domestic industry don't want to kill it. But but on the other hand you know I think he's certainly sensitive to whatever environmental concerns are out and. It -- -- might handle it -- at a look at the data for electric no. Nice and slow this morning -- up about twelve points -- cent -- thank you -- all right thanks a lot.

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

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