Wall St Week Ahead: Holiday "on standby" as clock ticks on cliff

NEW YORK (Reuters) - The last two weeks of December are traditionally quiet for stocks, but traders accustomed to a bit of time off are staying close to their mobile devices, thanks to the "fiscal cliff."

Last-minute negotiations in Washington on the so-called fiscal cliff - nearly $600 billion of tax increases and spending cuts set to take effect in January that could cause a sharp slowdown in growth or even a recession - are keeping some traders and analysts from taking Christmas holidays because any deal could have a big impact on markets.

"A lot of firms are saying to their trading desks, 'You can take days off for Christmas, but you are on standby to come in if anything happens.' This is certainly different from previous years, especially around this time of the year when things are supposed to be slowing down," said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago.

"Next week is going to be a Capitol Hill-driven market."

With talks between President Barack Obama and House Speaker John Boehner at an apparent standstill, it was increasingly likely that Washington will not come up with a deal before January 1.

Gordon Charlop, managing director at Rosenblatt Securities in New York, will also be on standby for the holiday season.

"It's a 'Look guys, let's just rotate and be sensible" type of situation going on," Charlop said.

"We are hopeful there is some resolution down there, but it seems to me they continue to walk that political tightrope... rather than coming up with something."

Despite concerns that the deadline will pass without a deal, the S&P 500 has held its ground with a 12.4 percent gain for the year. For this week, though, the S&P 500 fell 0.3 percent.

BEWARE OF THE WITCH

This coming Friday will mark the last so-called "quadruple witching" day of the year, when contracts for stock options, single stock futures, stock index options and stock index futures all expire. This could make trading more volatile.

"We could see some heavy selling as there is going to be a lot of re-establishing of positions, reallocation of assets before the year-end," Kinahan said.

RETHINKING APPLE

Higher tax rates on capital gains and dividends are part of the automatic tax increases that will go into effect next year, if Congress and the White House don't come up with a solution to avert the fiscal cliff. That possibility could give investors an incentive to unload certain stocks in some tax-related selling by December 31.

Some market participants said tax-related selling may be behind the weaker trend in the stock price of market leader Apple . Apple's stock has lost a quarter of its value since it hit a lifetime high of $705.07 on September 21.

On Friday, the stock fell 3.8 percent to $509.79 after the iPhone 5 got a chilly reception at its debut in China and two analysts cut shipment forecasts. But the stock is still up nearly 26 percent for the year.

"If you owned Apple for a long time, you should be thinking about reallocation as there will be changes in taxes and other regulations next year, although we don't really know which rules to play by yet," Kinahan said.

But one indicator of the market's reduced concern about the fiscal cliff compared with a few weeks ago, is the defense sector, which will be hit hard if the spending cuts take effect. The PHLX Defense Sector Index <.dfx> is up nearly 13 percent for the year, and sits just a few points from its 2012 high.

(Reporting by Angela Moon; Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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In Cairo Crisis, Unheard Voice From the Poor

Tara Todras-Whitehill for The New York Times

In Boulaq, so long neglected that houses regularly collapse, there had been little expectation that leaders would provide. But the disregard of the new president has been harder to take. More Photos »

CAIRO — A faded poster of Hosni Mubarak hangs on a wall in a crumbling neighborhood here, reminding residents of an empty pledge to find jobs for young people. Down the street, a campaign banner for his successor, Mohamed Morsi, hangs across the road, a reminder of more recent promises unkept.

In the neighborhood, called Boulaq, so long neglected that houses regularly collapse, there was little expectation that Mr. Mubarak would provide. But Mr. Morsi’s disregard has been much harder to take.

“We had high hopes in God, that things would improve,” Fathi Hussein said as he built a desk of dark wood for one of his clients, who are dwindling. “I elected a president to be good for the country. I did not elect him to impose his opinions on me.”

Away from the protests and violence that have marked the painful struggle over Egypt’s identity in the run-up to a referendum on Saturday on a constitution, residents of Boulaq have their own reasons to be consumed with the crisis. The chants of the protesters, for bread and freedom, resonate in Boulaq’s alleyways. In many of its industrial workshops, passed from struggling fathers to penniless sons, disappointment with the president, his Muslim Brotherhood supporters as well as the leaders of the opposition grows daily.

There is a sense in Boulaq that the raging arguments would be better resolved in places like this, where most Egyptians live, carrying the burdens of poverty with no help from an indifferent state, and where the revolution’s promise of dignity is long overdue.

When he took office five months ago, Mr. Morsi seemed to understand. “He talked about the conditions of the poor, the people in the slums,” said Amr Abdul Hafiz, a barber. “He talked about the street vendors and the tuk-tuk drivers. We thought he felt for us.”

The barber and many of his neighbors were convinced that Mr. Morsi and the Brotherhood had earned their chance to rule. People remembered the Brotherhood’s charity after the earthquake in 1992, and its decades of struggle as an outlaw movement. In stages, though, doubts grew as the Brotherhood broke its promises and Mr. Morsi seized power, culminating in his decision to ram through his constitution. Boulaq’s residents, including the president’s supporters, bristled at the thought of being treated as subjects again.

“He became occupied with other issues,” Mr. Abdul Hafiz said. “They want power, to make up for all the injustice they suffered, as if we were the ones who inflicted the injustice on them.”

At night, the arguments rage at a storied cafe on Abu Talib Street, with an intensity that no one here recalls seeing before. By day, the arguments simmer, in a neighborhood whose former grandeur still peeks out from underneath the rot.

Everywhere, people tell stories about the government’s failures, suggesting that the new leaders had turned out no better than the old ones.

In the shadow of a fallen dwelling, one of many that make Boulaq look as if it suffered a war, a widow stood over workmen she had hired to fix a ruptured sewer pipe. The ministry assigned to handle such matters had ignored her calls for three months, so she and her neighbors collected the money to pay for the repairs themselves.

On Abu Talib Street, Mr. Abdul Hafiz fretted over the dangers facing his pregnant wife, whose belly was swelling with excessive amniotic fluid. An appointment to see a doctor at a private hospital, which would cost $80, was too expensive. The administrators at a public hospital told her she could see a doctor a month after she was supposed to give birth.

Security guards threw Mr. Abdul Hafiz out of the hospital when he pointed out how ridiculous that was.

He wanted a change from Mr. Mubarak, who had coverings placed over the houses in Boulaq during the public opening of a nearby building “to hide insects like us.” It was part of a pattern of neglect that stretched back for decades, when the land under the residents was sold to investors in shady deals that no one has untangled.

Mai Ayyad contributed reporting.

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Facebook, Google tell the government to stop granting patents for abstract ideas

Facebook (FB), Google (GOOG) and six other tech companies have petitioned the courts to begin rejecting lawsuits that are based on patents for vague concepts rather than specific applications, TechCrunch reported. The agreement, which was cosigned by Zynga (ZNGA), Dell (DELL), Intuit (INTU), Homeaway (AWAY), Rackspace (RAX), and Red Hat (RHT), notes the only thing these abstract patents do is increase legal fees and slow innovation in the industry. The companies claim that “abstract patents are a plague in the high tech sector” and force innovators into litigation that results in huge settlements or steep licensing fees for technology they have already developed on their own, which then leads to higher prices for consumers.

“Many computer-related patent claims just describe an abstract idea at a high level of generality and say to perform it on a computer or over the Internet,” the briefing reads. “Such barebones claims grant exclusive rights over the abstract idea itself, with no limit on how the idea is implemented. Granting patent protection for such claims would impair, not promote, innovation by conferring exclusive rights on those who have not meaningfully innovated, and thereby penalizing those that do later innovate by blocking or taxing their applications of the abstract idea.”

The companies conclude, “It is easy to think of abstract ideas about what a computer or website should do, but the difficult, valuable, and often groundbreaking part of online innovation comes next: designing, analyzing, building, and deploying the interface, software, and hardware to implement that idea in a way that is useful in daily life. Simply put, ideas are much easier to come by than working implementations.”

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The X Factor Reveals Season 2 Finalists

TV Watch

The X Factor

12/13/2012 at 09:10 PM EST

Carly Rose Sonenclar, Emblem3, Tate Stevens and Fifth Harmony

Ray Mickshaw/FOX (4)

Sparks will fly at the finale!

On Thursday, The X Factor revealed its top three acts, who will perform next week in the final night of competition – in hopes of taking home the $5 million recording contract.

Simon Cowell said it would take a miracle to get his girl group, Fifth Harmony, to the finale after they performed Shontelle's "Impossible" and Ellie Goulding's "Anything Could Happen" on Wednesday. Keep reading to find out if their dream came true ...

Apparently, miracles do happen! Fifth Harmony was the first act to be sent through to the finale.

They will compete against departing judge L.A. Reid's country singer, Tate Stevens, and Britney Spears's only remaining contestant, Carly Rose Sonenclar.

That means Simon's promising boy band, Emblem3, are out of the running for the big prize.

"This is the way it goes on competitions," Simon said. "I'm gutted really for them ... But it happens."

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Study: People worldwide living longer, but sicker

LONDON (AP) — Nearly everywhere around the world, people are living longer and fewer children are dying. But increasingly, people are grappling with the diseases and disabilities of modern life, according to the most expansive global look so far at life expectancy and the biggest health threats.

The last comprehensive study was in 1990 and the top health problem then was the death of children under 5 — more than 10 million each year. Since then, campaigns to vaccinate kids against diseases like polio and measles have reduced the number of children dying to about 7 million.

Malnutrition was once the main health threat for children. Now, everywhere except Africa, they are much more likely to overeat than to starve.

With more children surviving, chronic illnesses and disabilities that strike later in life are taking a bigger toll, the research said. High blood pressure has become the leading health risk worldwide, followed by smoking and alcohol.

"The biggest contributor to the global health burden isn't premature (deaths), but chronic diseases, injuries, mental health conditions and all the bone and joint diseases," said one of the study leaders, Christopher Murray, director of the Institute of Health Metrics and Evaluation at the University of Washington.

In developed countries, such conditions now account for more than half of the health problems, fueled by an aging population. While life expectancy is climbing nearly everywhere, so too are the number of years people will live with things like vision or hearing loss and mental health issues like depression.

The research appears in seven papers published online Thursday by the journal Lancet. More than 480 researchers in 50 countries gathered data up to 2010 from surveys, censuses and past studies. They used statistical modeling to fill in the gaps for countries with little information. The series was mainly paid for by the Bill & Melinda Gates Foundation.

As in 1990, Japan topped the life expectancy list in 2010, with 79 for men and 86 for women. In the U.S. that year, life expectancy for men was 76 and for women, 81.

The research found wide variations in what's killing people around the world. Some of the most striking findings highlighted by the researchers: — Homicide is the No. 3 killer of men in Latin America; it ranks 20th worldwide. In the U.S., it is the 21st cause of death in men, and in Western Europe, 57th.

— While suicide ranks globally as the 21st leading killer, it is as high as the ninth top cause of death in women across Asia's "suicide belt," from India to China. Suicide ranks 14th in North America and 15th in Western Europe.

— In people aged 15-49, diabetes is a bigger killer in Africa than in Western Europe (8.8 deaths versus 1 death per 100,000).

— Central and Southeast Asia have the highest rates of fatal stroke in young adults at about 15 cases per 100,000 deaths. In North America, the rate is about 3 per 100,000.

Globally, heart disease and stroke remain the top killers. Reflecting an older population, lung cancer moved to the 5th cause of death globally, while other cancers including those of the liver, stomach and colon are also in the top 20. AIDS jumped from the 35th cause of death in 1990 to the sixth leading cause two decades later.

While chronic diseases are killing more people nearly everywhere, the overall trend is the opposite in Africa, where illnesses like AIDS, malaria and tuberculosis are still major threats. And experts warn again shifting too much of the focus away from those ailments.

"It's the nature of infectious disease epidemics that if you turn away from them, they will crop right back up," said Jennifer Cohn, a medical coordinator at Doctors Without Borders.

Still, she acknowledged the need to address the surge of other health problems across Africa. Cohn said the agency was considering ways to treat things like heart disease and diabetes. "The way we treat HIV could be a good model for chronic care," she said.

Others said more concrete information is needed before making any big changes to public health policies.

"We have to take this data with some grains of salt," said Sandy Cairncross, an epidemiologist at the London School of Hygiene and Tropical Medicine.

He said the information in some of the Lancet research was too thin and didn't fully consider all the relevant health risk factors.

"We're getting a better picture, but it's still incomplete," he said.

___

Online:

www.lancet.com

http://healthmetricsandevaluation.org

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AMR pilots union meets company CEO, still backs USAir merger: spokesman

(Reuters) - American Airlines' pilots union still supports a merger with US Airways Group, a union spokesman said on Thursday, unmoved by a pitch from AMR Chief Executive Tom Horton that the company should exit Chapter 11 as an independent carrier.

Next week, US Airways CEO Doug Parker is expected to meet with the board of the Allied Pilots Association, spokesman Dennis Tajer said.

Horton, who became CEO of American parent AMR Corp as the company filed for bankruptcy protection in November 2011, requested the meeting with the pilots union leadership and met with the board for about three hours on Thursday, Tajer said.

"The case was made for the standalone plan, and APA leadership gave the standalone plan pitch due consideration but after the meeting continued to believe that a merger is best for the longtime interest of our pilots and our airline," the spokesman added.

American Airlines met with the union to thank it for its leadership in reaching a new labor contract, "discuss the next steps in our evaluation of strategic alternatives and exchange information," according to a statement from spokesman Mike Trevino.

US Airways declined to comment.

US Air has been pushing for a merger with American all year, and its plan has the support of unions that represent American's flight attendants and ground workers, in addition to the pilots union. The two carriers combined would be on par with current No. 1 United Continental Holdings in scope.

"We anticipate that Mr. Parker will articulate his vision and plan for the new American Airlines next week," Tajer added.

American Airlines creditors want a potential merger with US Airways to be an all-stock deal rather than one that pays some claims in cash, people familiar with the matter said this week. Merger discussions among US Airways, AMR and its creditors are at an advanced stage, the sources said.

The pilots unions at both American and US Airways said this week they would join the merger talks with AMR creditors and the companies. The Allied Pilots Association last week approved a new labor accord with American that grants it a 13.5 percent equity stake in a reorganized AMR.

Keith Wilson, president of the pilots union, said in a message to members on Wednesday that Wall Street analysts suggest an American-US Airways merger is likely. "While I will refrain from speculation, we must be ready to move quickly toward a potential merger," Wilson said.

American Airlines shares rose 16.9 percent to 76 cents on Thursday, while US Airways rose 2.1 percent to $12.97.

(Reporting by Karen Jacobs; Editing by Dan Grebler)

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North Koreans Launch Rocket in Defiant Act

KCNA, via Reuters

This photo released by the state-run Korean Central News Agency shows North Korean technicians monitoring the launch of an Unha-3 rocket carrying the satellite Kwangmyongsong-3, or Shining Star-3, into orbit on Wednesday.

WASHINGTON — The United States and its Asian allies began an effort on Wednesday to impose additional sanctions on North Korea after its largely successful rocket launching, but this time Washington added a warning to China: Failure to rein in Kim Jong-un, the North’s new leader, will result in an even greater American military presence in the Pacific.

The Chinese government, which sent a delegation to Pyongyang last month to warn against the missile test, said it “regrets” the launching, which put a 200-pound earth surveillance satellite into orbit.

The Chinese Foreign Ministry spokesman, Hong Lei, said that North Korea’s right to a peaceful space program was subject to “limitations” by United Nations Security Council resolutions. But he declined to say whether North Korea had failed to live up to those obligations, which include a prohibition on launchings like the one on Wednesday morning that could be used to advance missile technology.

In fact, after a preliminary meeting of the Security Council members in New York, it was far from clear how far the Chinese are willing to go in further punishing an ally they once called as close as “lips and teeth.” Beijing’s biggest fear has always been destabilizing North Korea, and setting off a collapse that could put South Korean forces, and perhaps their American allies, on China’s border.

But the essence of the American strategy, as described Wednesday by administration officials, was to force the Chinese into an uncomfortable choice.

“The kinds of things we would do to enhance the region’s security against a North Korean nuclear missile capability,” one senior administration official said in an interview, “are indistinguishable from the things the Chinese would view as a containment strategy” aimed at Beijing.

They would include increased patrols in waters the Chinese are trying to claim as part of their exclusive zone, along with military exercises with allies in the region. “It’s the right approach, but whether it works is another matter,” said Christopher R. Hill, who was the chief negotiator with North Korea during President George W. Bush’s second term, and is now dean of the Korbel School of International Studies at the University of Denver, on Wednesday. “The approach of thickening up the antimissile effort is something that would get China’s attention.”

Many of those efforts are planned anyway as part of President Obama’s “rebalancing” strategy to ensure a continued American presence in Asia. The president has repeatedly said he has neither the desire nor the ability to contain China’s rise, but the rebalancing is clearly intended to keep the Chinese from nudging the United States out of the region.

Already, the Chinese believe that America’s antimissile efforts from Alaska to the Pacific are designed to counter their own nuclear arsenal.

Administration officials said that while the launching was successful — and advanced the North’s missile program — it was hardly a threat to the United States, despite a warning by Robert M. Gates in 2011, when he was secretary of defense, that the North would have a missile capable of reaching the United States by 2016.

“I am not disparaging this demonstration of 1950s Sputnik-quality technology,” the administration official said, referring to the Soviet satellite that prompted the space race during the cold war. He then went on to disparage it, noting that Mr. Kim “is in the family business, like his daddy before him, and it’s a form of extortion.”

South Korean officials sounded similar themes, saying that the North’s effort was to extract a higher price — in aid, investment and diplomatic concessions — for restraining future launchings or nuclear tests.

Riki Ellison, chairman of the Missile Defense Advocacy Alliance, a private group in Washington, called the North Korean satellite launching “a fundamental breakthrough” that showed the main elements of an intercontinental ballistic missile.

David E. Sanger reported from Washington, and William J. Broad from New York. Choe Sang-hun contributed reporting from Seoul, South Korea.

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New Flickr iPhone app to compete with Instagram and Twitter with 16 filters

Hot on the heels of its email redesign, Yahoo (YHOO) announced on Wednesday that it has completely redesigned the Flickr iPhone app. The new app borrows heavily from Instagram and focuses on what makes Flickr special: photos and communities. Yahoo’s new Flickr app also includes 16 filters with their own fancy names to go head-on with Instagram and Twitter’s recently updated app that added eight filters. Users can now access the Flickr app with numerous accounts including Facebook (FB) and Google (GOOG) and photos can be shared to Facebook, Twitter, Tumblr or via email. The new Flickr app is available for free on iPhone but to our disappointment, there isn’t an iPad-optimized version.

Ellis Hamburger from The Verge penned an interesting editorial on how Twitter misses the mark by simply adding filters to its app without having the close community that makes Instagram so addictive. Led by CEO Marissa Mayer, Yahoo seems aware that mobile apps thrive on the communities that sprout up. The new Flickr app’s emphasis on how the images are displayed and shared in visually appealing and digestible thumbnails suggests Yahoo finally understands mobile.

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Tevin Hunte Is 'So Happy' After His Voice Elimination

TV Watch

The Voice

By Jessica Herndon and Julia Haskins

12/12/2012 at 07:45 PM EST

Team Cee Lo's Trevin Hunte was eliminated on Tuesday's episode of The Voice, but the soulful singer isn't letting the end of this journey hold him back.

"I feel like the best person on the planet Earth. I am so happy and excited to be honest," Hunte told PEOPLE after the show. I feel like a weight has been lifted. Being away from family and friends and what you're used to was definitely a hard thing for me."

Hunte is looking forward to his mom's cooking and seeing his friends back home, and he won't waste a second wondering what if he'd made it further.

"I have no regrets. I am glad that I took a leap of faith and auditioned," he said. "I auditioned for American Idol and told my family I didn't have the strength to do it again. But I am definitely happy and excited that I made it this far."

And he still has a long way to go. "I'm only 18," he said. "I'm just really excited."

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Congress examines science behind HGH test for NFL

WASHINGTON (AP) — A congressional committee has opened a hearing to examine the science behind a human growth hormone test the NFL wants to start using on its players.

Nearly two full seasons have passed since the league and the players' union signed a labor deal that set the stage for HGH testing.

The NFL Players Association won't concede the validity of a test that's used by Olympic sports and Major League Baseball, and the sides haven't been able to agree on a scientist to help resolve that impasse.

Among the witnesses before the House Oversight and Government Reform Committee on Wednesday is Pro Football Hall of Fame member Dick Butkus. In his prepared statement, Butkus writes: "Now, let's get on with it. The HGH testing process is proven to be reliable."

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