Cliff fight may knock out December rally

NEW YORK (Reuters) - In normal times, next week's slew of U.S. economic data could be a springboard for a December rally in the stock market.

December is historically a strong month for markets. The S&P 500 has risen 16 times in the past 20 years during the month.

But the market hasn't been operating under normal circumstances since November 7 when a day after the U.S. election, investors' focus shifted squarely to the looming "fiscal cliff."

Investors are increasingly nervous about the ability of lawmakers to undo the $600 billion in tax increases and spending cuts that are set to begin in January; those changes, if they go into effect, could send the U.S. economy into a recession.

A string of economic indicators next week, which includes a key reading of the manufacturing sector on Monday, culminates with the November jobs report on Friday.

But the impact of those economic reports could be muted. Distortions in the data caused by Superstorm Sandy are discounted.

The spotlight will be more firmly on signs from Washington that politicians can settle their differences on how to avoid the fiscal cliff.

"We have a week with a lot of economic data, and obviously most of the economic data is going to reflect the effects of Sandy, and that might be a little bit negative for the market next week, but most of that is already expected - the main focus remains the fiscal cliff," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

Concerns about the cliff sent the S&P 500 <.spx> into a two-week decline after the elections, dropping as much as 5.3 percent, only to rally back nearly 4 percent as the initial tone of talks offered hope that a compromise could be reached and investors snapped up stocks that were viewed as undervalued.

On Wednesday, the S&P 500 gained more than 20 points from its intraday low after House Speaker John Boehner said he was optimistic that a budget deal to avoid big spending cuts and tax hikes could be worked out. The next day, more pessimistic comments from Boehner, an Ohio Republican, briefly wiped out the day's gains in stocks.

On Friday, the sharp divide between the Democrats and the Republicans on taxes and spending was evident in comments from President Barack Obama, who favors raising taxes on the wealthy, and Boehner, the top Republican in Congress, who said Obama's plan was the wrong approach and declared that the talks had reached a stalemate.

"It's unusual to end up with one variable in this industry, it's unusual to have a single bullet that is the causal factor effect, and you are sitting here for the next maybe two weeks or more, on that kind of condition," said Sandy Lincoln, chief market strategist at BMO Asset Management U.S. in Chicago.

"And that is what is grabbing the markets."

BE CONTRARY AND MAKE MERRY

But investor attitudes and seasonality could also help spur a rally for the final month of the year.

The most recent survey by the American Association of Individual Investors reflected investor caution about the cliff. Although bullish sentiment rose above 40 percent for the first time since August 23, bearish sentiment remained above its historical average of 30.5 percent for the 14th straight week.

December is a critical month for retailers such as Target Corp and Macy's Inc . They saw monthly retail sales results dented by Sandy, although the start of the holiday shopping season fared better.

With consumer spending making up roughly 70 percent of the U.S. economy, a solid showing for retailers during the holiday season could help fuel any gains.

Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, believes the recent drop after the election could be a market bottom, with sentiment leaving stocks poised for a December rally.

"The concerns on the fiscal cliff - as valid as they might be - could be overblown. When you look at a lot of the overriding sentiment, that has gotten extremely negative," said Detrick.

"From that contrarian point of view with the historically bullish time frame of December, we once again could be setting ourselves up for a pretty nice end-of-year rally, based on lowered expectations."

SOME FEEL THE BIG CHILL

Others view the fiscal cliff as such an unusual event that any historical comparisons should be thrown out the window, with a rally unlikely because of a lack of confidence in Washington to reach an agreement and the economic hit caused by Sandy.

"History doesn't matter. You're dealing with an extraordinary set of circumstances that could very well end up in the U.S. economy going into a recession," said Phil Orlando, chief equity market strategist at Federated Investors in New York.

"And the likelihood of that is exclusively in the hands of our elected officials in Washington. They could absolutely drag us into a completely voluntary recession."

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: charles.mikolajczak(at)thomsonreuters.com )

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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Muslims Face Expulsion From Western Myanmar

Kuni Takahashi for The New York Times

A Muslim girl at a camp for displaced people in Sittwe, where Muslims face what some groups are calling ethnic cleansing. More Photos »

SITTWE, Myanmar — The Buddhist monastery on the edge of this seaside town is a picture of tranquillity, with novice monks in saffron robes finding shade under a towering tree and their teacher, U Nyarna, greeting a visitor in a sunlit prayer room.

But in these placid surroundings Mr. Nyarna’s message is discordant, and a far cry from the Buddhist precept of avoiding harm to living creatures. Unprompted, Mr. Nyarna launches into a rant against Muslims, calling them invaders, unwanted guests and “vipers in our laps.”

“According to Buddhist teachings we should not kill,” Mr. Nyarna said. “But when we feel threatened we cannot be saints.”

Violence here in Rakhine State — where clashes have left at least 167 people dead and 100,000 people homeless, most of them Muslims — has set off an exodus that some human rights groups condemn as ethnic cleansing. It is a measure of the deep intolerance that pervades the state, a strip of land along the Bay of Bengal in western Myanmar, that Buddhist religious leaders like Mr. Nyarna, who is the head of an association of young monks, are participating in the campaign to oust Muslims from the country, which only recently began a transition to democracy from authoritarian rule.

After a series of deadly rampages and arson attacks over the past five months, Buddhists are calling for Muslims who cannot prove three generations of legal residence — a large part of the nearly one million Muslims from the state — to be put into camps and sent to any country willing to take them. Hatred between Muslims and Buddhists that was kept in check during five decades of military rule has been virtually unrestrained in recent months.

Even the country’s leading liberal voice and defender of the downtrodden, Daw Aung San Suu Kyi, has been circumspect in her comments about the violence. President Obama made the issue a priority during his visit to the country this month — the first by a sitting American president — and Muslim nations as diverse as Indonesia and Saudi Arabia have expressed alarm.

Buddhists and Muslims in western Myanmar have had an uneasy coexistence for decades, and in some areas for centuries, but the thin threads that held together the social fabric of Rakhine State have torn apart this year.

Muslims who fled their homes now live in slumlike encampments that are short on food and medical care, surrounded by a Buddhist population that does not want them as neighbors.

“This issue must be solved urgently,” said U Shwe Maung, a Muslim member of Parliament. “When there is no food or shelter, people will die.”

Conditions have become so treacherous for Muslims across the state that Mr. Shwe Maung travels with a security force provided by the government. “They give me a full truck of police,” he said. “Two, three or four policemen is not enough.”

Leaders of the Buddhist majority in the state say they feel threatened by what they say is the swelling Muslim population from high birthrates and by Islamic rituals they find offensive, like the slaughter of animals.

“We are very fearful of Islamicization,” said U Oo Hla Saw, general secretary of the Rakhine Nationalities Development Party, the largest party in the state. “This is our native land; it’s the land of our ancestors.”

During outbreaks of sectarian violence in June and again in October, villagers armed themselves with swords, clubs and sharpened bicycle spokes that they launched from homemade catapults. In Muslim-majority areas, monasteries were burned. In Buddhist-majority areas, mosques were destroyed. The mayhem was set off by the rape and murder of a Buddhist girl for which Muslims were blamed.

The center of Sittwe, a former British colonial outpost, is now empty of the Muslims who once worked in large numbers as stevedores and at other manual jobs.

“I’m scared to go back,” said Aye Tun Sein, who was a teacher at a government school before the upheaval. In his village, Teh Chaung East, a 20 minute drive from Sittwe, he said that no one has a job because no one can leave the village, a collection of shacks and tents.

Political leaders describe the near total segregation of Muslims as temporary, but it appears to be more and more permanent.

“I don’t miss them,” said U Win Maung, a bicycle rickshaw driver whose house was burned down in June by his Muslim neighbors. “The hatred we have for each other is growing day by day.”

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Apple overcomes last hurdle, iPhone 5 cleared for sale in China as Android continues to dominate

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Ben Affleck Grabs a Bite with His Girls

Caught in the Act

11/30/2012 at 06:00 AM EST

Ben Affleck and Seraphina

Bauer-Griffin

Leaving his little boy at home, doting dad Ben Affleck spent some time with two very special ladies on Wednesday.

The Argo star popped into Farmshop in Santa Monica, Calif., with his mother Chris and daughter Seraphina in tow. Affleck ordered a large iced coffee for himself, a latte for his mom and water without ice – and a Christmas cookie! – for his little girl. After grabbing their goods, the trio walked back out into the Brentwood Country Mart. – Jennifer Garcia

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Kenya village of AIDS orphans hangs hopes on trees

NYUMBANI, Kenya (AP) — There are no middle-aged adults in the Kenyan village of Nyumbani. They all died years ago. Only the young and old live here.

The 938 children here all saw their parents die. The 97 grandparents saw their middle-aged children die. But put together, the bookend generations take care of one another.

UNAIDS says that as of 2011 an estimated 23.5 million people living with HIV resided in sub-Saharan Africa, representing 69 percent of the global HIV burden. Eastern and southern Africa are the hardest-hit regions.

Saturday is World AIDS Day.

Nyumbani is currently planting tens of thousands of trees for the fourth straight year in the hopes that the village will soon harvest the hardwood and become self-sustaining.

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Stock futures climb; personal income, Chicago PMI data due

NEW YORK (Reuters) - Stock futures inched higher on the final trading day of the month, but the mood was still cautious with the market firmly focused on U.S. budget talks.

* U.S. President Barack Obama plans to travel to a factory in Pennsylvania to press his case on raising taxes on the wealthy to narrow the deficit. The president and congressional Republicans are in discussions on how to avoid steep automatic tax hikes and deep spending cuts that come into effect beginning in January, unless they reach a deal to avoid them.

* Whole Foods Market Inc announced a special cash dividend of $2.00 per share. In expectation of higher dividend tax rates in 2013, companies have been shifting dividends or announcing special payouts to shareholders.

* After a close relationship for several years, Facebook Inc and Zynga Inc revised terms of a partnership agreement between the companies; under the new pact, Zynga will have limited ability to promote its site on Facebook. Zynga shares were down 6.9 percent at $2.43 in premarket trading. Facebook shares were up 0.8 percent at $27.55.

* The U.S. Commerce Dept releases October personal income and consumption data at 8:30 a.m. ET (1330 GMT). Economists in a Reuters survey expect a 0.2 percent rise in income, and an unchanged reading for spending. In September, income grew 0.4 percent and spending was up 0.8 percent.

* The Institute for Supply Management in Chicago releases November index of manufacturing activity at 9:45 a.m. (1445 GMT). A reading of 50.5 is expected, compared with 49.9 in October.

* Apple Inc's latest iPhone has received final clearance from Chinese regulators, paving the way for a December debut in a highly competitive market where the lack of a new model had severely eroded its share of product sales.

* S&P 500 futures rose 1.8 points and were slightly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 33 points, and Nasdaq 100 futures added 8.75 points.

* Japan's Nikkei average hit a seven-month closing high on Friday as a weaker yen, driven by expectations the Bank of Japan will act more boldly under a likely new government following December 16 elections, lifted the shares of exporters.

* European shares were steady at 15-month highs as investors squared the books on the final trading day of the month, with all eyes on U.S. budget talks.

* U.S. stocks finished higher on Thursday as investors bought on sporadic dips in a market roiled by conflicting comments from Washington on negotiations to avert the "fiscal cliff," automatic spending cuts and tax rises set to begin in 2013.

(Editing by Bernadette Baum)

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The Next War: In Federal Budget Cutting, F-35 Fighter Jet Is at Risk

Luke Sharrett for The New York Times

Vice Adm. David Venlet was named to lead the Joint Strike Fighter program in 2010 after problems had left it behind schedule and over budget.

LEXINGTON PARK, Md. — The Marine version of the F-35 Joint Strike Fighter, already more than a decade in the making, was facing a crucial question: Could the jet, which can soar well past the speed of sound, land at sea like a helicopter?

Luke Sharrett for The New York Times

An F-35B, the Marine Corps version of the Joint Strike Fighter.

On an October day last year, with Lt. Col. Fred Schenk at the controls, the plane glided toward a ship off the Atlantic coast and then, its engine rotating straight down, descended gently to the deck at seven feet a second.

There were cheers from the ship’s crew members, who “were all shaking my hands and smiling,” Colonel Schenk recalled.

The smooth landing helped save that model and breathed new life into the huge F-35 program, the most expensive weapons system in military history. But while Pentagon officials now say that the program is making progress, it begins its 12th year in development years behind schedule, troubled with technological flaws and facing concerns about its relatively short flight range as possible threats grow from Asia.

With a record price tag — potentially in the hundreds of billions of dollars — the jet is likely to become a target for budget cutters. Reining in military spending is on the table as President Obama and Republican leaders in Congress look for ways to avert a fiscal crisis. But no matter what kind of deal is reached in the next few weeks, military analysts expect the Pentagon budget to decline in the next decade as the war in Afghanistan ends and the military is required to do its part to reduce the federal debt.

Behind the scenes, the Pentagon and the F-35’s main contractor, Lockheed Martin, are engaged in a conflict of their own over the costs. The relationship “is the worst I’ve ever seen, and I’ve been in some bad ones,” Maj. Gen. Christopher Bogdan of the Air Force, a top program official, said in September. “I guarantee you: we will not succeed on this if we do not get past that.”

In a battle that is being fought on other military programs as well, the Pentagon has been pushing Lockheed to cut costs much faster while the company is fighting to hold onto a profit. “Lockheed has seemed to be focused on short-term business goals,” Frank Kendall, the Pentagon’s top weapons buyer, said this month. “And we’d like to see them focus more on execution of the program and successful delivery of the product.”

The F-35 was conceived as the Pentagon’s silver bullet in the sky — a state-of-the art aircraft that could be adapted to three branches of the military, with advances that would easily overcome the defenses of most foes. The radar-evading jets would not only dodge sophisticated antiaircraft missiles, but they would also give pilots a better picture of enemy threats while enabling allies, who want the planes, too, to fight more closely with American forces.

But the ambitious aircraft instead illustrates how the Pentagon can let huge and complex programs veer out of control and then have a hard time reining them in. The program nearly doubled in cost as Lockheed and the military’s own bureaucracy failed to deliver on the most basic promise of a three-in-one jet that would save taxpayers money and be served up speedily.

Lockheed has delivered 41 planes so far for testing and initial training, and Pentagon leaders are slowing purchases of the F-35 to fix the latest technical problems and reduce the immediate costs. A helmet for pilots that projects targeting data onto its visor is too jittery to count on. The tail-hook on the Navy jet has had trouble catching the arresting cable, meaning that version cannot yet land on carriers. And writing and testing the millions of lines of software needed by the jets is so daunting that General Bogdan said, “It scares the heck out of me.”

With all the delays — full production is not expected until 2019 — the military has spent billions to extend the lives of older fighters and buy more of them to fill the gap. At the same time, the cost to build each F-35 has risen to an average of $137 million from $69 million in 2001.

The jets would cost taxpayers $396 billion, including research and development, if the Pentagon sticks to its plan to build 2,443 by the late 2030s. That would be nearly four times as much as any other weapons system and two-thirds of the $589 billion the United States has spent on the war in Afghanistan. The military is also desperately trying to figure out how to reduce the long-term costs of operating the planes, now projected at $1.1 trillion.

“The plane is unaffordable,” said Winslow T. Wheeler, an analyst at the Project on Government Oversight, a nonprofit group in Washington.

Todd Harrison, an analyst at the Center for Strategic and Budgetary Assessments, a research group in Washington, said Pentagon officials had little choice but to push ahead, especially after already spending $65 billion on the fighter. “It is simultaneously too big to fail and too big to succeed,” he said. “The bottom line here is that they’ve crammed too much into the program. They were asking one fighter to do three different jobs, and they basically ended up with three different fighters.”

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Tougher UAE Internet dissent law shuts door to free speech: HRW

DUBAI (Reuters) – The United Arab Emirates has “effectively closed the country’s remaining forum for free speech” with a decree issued earlier this month that tightened the law on online dissent, Human Rights Watch said on Wednesday.

The U.S.-allied UAE, a Gulf trading and tourism hub and big oil producer, has not seen the serious unrest that has toppled four Arab heads of state since early last year. But it has shown little tolerance of open dissent, and more than 60 members of an Islamist group have been detained since the start of the year.

The decree by President Sheikh Khalifa bin Zayed al-Nahayan imposes prison sentences for anyone who derides or caricatures the Gulf Arab country’s rulers or state institutions on the web, the state news agency WAM reported on November 12.

“The UAE’s cybercrimes decree reflects an attempt to ban even the most tempered criticism,” said Joe Stork, deputy Middle East director at Human Rights Watch.

“The determination to police and punish online dissent, no matter how mild, is incompatible with the image UAE rulers are trying to promote of a progressive, tolerant nation.”

A source close to the UAE government said on Wednesday the decree aimed to address technological advances in communications that could affect the rights and beliefs of people.

“This decree does not restrict freedom of expression, which is guaranteed by the UAE constitution,” the source said. “The decree represents an extension of legislation to cover a wide variety of potential offences in many fields, including terrorism, human trafficking, money laundering and identity theft.”

POSSIBLE PRISON TERMS

WAM said the amendments “stipulate penalties of imprisonment on any person who creates or runs an electronic website or uses any information technology medium to deride or damage the reputation or stature of the state or any of its institutions”.

This included the president, the vice president, any of the rulers of the seven emirates that make up the UAE, crown princes, deputy rulers, the national flag, the national anthem, the emblem of the state or any of its symbols.

Social networking sites have enlivened public discourse in the UAE, a major oil exporter and business hub, where state media are tightly controlled and freedom of speech restricted.

People across UAE society, from ruling family members to ministers, government supporters and dissidents, make use of sites such as Twitter and Facebook.

The amendments announced on November 12 cover a wide range of offences, including outlawing the use of the Internet for human trafficking and prostitution.

But they include jail terms for “any person publishing any information, news, caricatures or any other kind of pictures that would pose threats to the security of the state and to its highest interests or violate its public order,” said WAM.

In addition, anyone who uses the Internet “to call for demonstrations, marches and similar activities without a license being obtained in advance from the competent authorities” could also face imprisonment.

Human Rights Watch said the decree’s vaguely worded provisions provide a legal basis to prosecute and jail people who use information technology to criticize senior officials, demand political reforms or organize unlicensed demonstrations.

“Although some provisions are aimed at preventing the proliferation of racist or sectarian views online, the principal effect of the law is severe restrictions on the rights to free expression and free association and assembly,” the New York-based watchdog said.

(Reporting by Sami Aboudi; Editing by Mark Heinrich)

Internet News Headlines – Yahoo! News

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Lindsay Lohan Arrested for Alleged Assault in Club

By Stephen M. Silverman

11/29/2012 at 06:55 AM EST

Lindsay Lohan was arrested and charged with third-degree assault at 4 a.m. Thursday in Manhattan's Chelsea neighborhood after an alleged altercation with a woman in a nightclub, according to TV reports.

A NYPD spokesman said the Liz & Dick star, 26, allegedly exchanged words with a female patron at Club Avenue, on 10th Avenue between 17th and 18th Streets, reports Fox News. The confrontation then got physical, police say.

TMZ reports that Lohan, after telling the woman to give her some space, or words to the effect, reputedly punched the woman in the face.

The other woman was not arrested or injured, according to WNBC News, which also said Lohan was still in police custody at the 10th Precinct as of 6:30 a.m. A police source told the station that Lohan made no comment to authorities.

The actress's publicist could not be reached, said WNBC.

Lohan currently is on informal probation for removing a necklace from a California jewelry store last year, and could face potential jail time if she is re-arrested.

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Simple measures cut infections caught in hospitals

CHICAGO (AP) — Preventing surgery-linked infections is a major concern for hospitals and it turns out some simple measures can make a big difference.

A project at seven big hospitals reduced infections after colorectal surgeries by nearly one-third. It prevented an estimated 135 infections, saving almost $4 million, the Joint Commission hospital regulating group and the American College of Surgeons announced Wednesday. The two groups directed the 2 1/2-year project.

Solutions included having patients shower with special germ-fighting soap before surgery, and having surgery teams change gowns, gloves and instruments during operations to prevent spreading germs picked up during the procedures.

Some hospitals used special wound-protecting devices on surgery openings to keep intestine germs from reaching the skin.

The average rate of infections linked with colorectal operations at the seven hospitals dropped from about 16 percent of patients during a 10-month phase when hospitals started adopting changes to almost 11 percent once all the changes had been made.

Hospital stays for patients who got infections dropped from an average of 15 days to 13 days, which helped cut costs.

"The improvements translate into safer patient care," said Dr. Mark Chassin, president of the Joint Commission. "Now it's our job to spread these effective interventions to all hospitals."

Almost 2 million health care-related infections occur each year nationwide; more than 90,000 of these are fatal.

Besides wanting to keep patients healthy, hospitals have a monetary incentive to prevent these infections. Medicare cuts payments to hospitals that have lots of certain health care-related infections, and those cuts are expected to increase under the new health care law.

The project involved surgeries for cancer and other colorectal problems. Infections linked with colorectal surgery are particularly common because intestinal tract bacteria are so abundant.

To succeed at reducing infection rates requires hospitals to commit to changing habits, "to really look in the mirror and identify these things," said Dr. Clifford Ko of the American College of Surgeons.

The hospitals involved were Cedars-Sinai Medical Center in Los Angeles; Cleveland Clinic in Ohio; Mayo Clinic-Rochester Methodist Hospital in Rochester, Minn.; North Shore-Long Island Jewish Health System in Great Neck, NY; Northwestern Memorial Hospital in Chicago; OSF Saint Francis Medical Center in Peoria, Ill.; and Stanford Hospital & Clinics in Palo Alto, Calif.

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Online:

Joint Commission: http://www.jointcommission.org

American College of Surgeons: http://www.facs.org

___

AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner

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