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The umbilical site normally heals by 1 month of age.
Any fluid draining after this period suggests an abnormal connection between the surface of the abdomen and the underlying structures, and requires further investigation. Clear yellow fluid could represent a persistent connection of the bladder with the umbilicus called a patent urachus. The fluid that leaks is actually urine. The treatment is surgical closure of the connection.
Pus oozing from the umbilical stump would imply infection, especially if there is concomitant redness of the skin around the umbilicus. An omphalitis can be life-threatening, and requires admission for invtravenous antibiotics.
Umbilical hernias are common in infants, and are usually noted with diastasis of the rectus muscles. Most umbilical hernias resovle by school age, and do not require surgical intervention.
An umbilical granuloma is a small piece of bright red, moist flesh that remains in the umbilicus after cord separation. It is scar tissue, usually on a stalk, that did not become normally covered with skin cells. It contains no nerves and has no feeling. Most can be simply cauterised with silver nitrate.