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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News Analysis: China Stays Beside North Korea, a Buffer Against the U.S.

BEIJING — Even though North Korea ignored China’s appeal not to test its new longer-range missile, the new leadership here appears intent on remaining a steadfast supporter of its wayward neighbor because it considers the North a necessary buffer against the United States and its allies.

Analysts said that China’s overriding fear was of a collapse of the hard-line Communist government in Pyongyang, which could lead to the reunification of the Korean Peninsula under a government in Seoul allied with the United States. China, they said, would consider an American presence on its doorstep untenable.

But China’s unyielding support of Kim Jong-un has a serious downside, they added, because it may lead to a result nearly as unpalatable: efforts by the United States and its regional allies Japan and South Korea to contain China.

“It stirs up regional security,” said Zhu Feng, a professor of international relations at Peking University who favors reducing support for North Korea. Without naming the United States, he added that the missile launching “facilitates China-bashers to work on hard-line policies to contain China, or just balance China.”

Obama administration officials were clearly exasperated this week with China’s inability to rein in Mr. Kim, saying that they were considering a stronger military presence in the Asia-Pacific region.

Beneath the official tolerance of North Korea, a debate about the wisdom of remaining loyal to such a world outlier and its defiant young leader simmers among analysts who strive to influence China’s foreign policy.

China runs the risk, Dr. Zhu said, of being bunched together with North Korea as one of “the two bad guys.”

“I feel very frustrated,” Dr. Zhu added. “At least we should distance ourselves from North Korea. The reality is, as long as North Korea can’t change their behavior, then peace and stability on the peninsula will be increasingly vulnerable.”

China has twice asked Mr. Kim, who inherited the leadership of North Korea after the death of his father at the end of last year, not to proceed with missile tests, and twice he has rebuffed the entreaties. Shortly after he came to power, a Chinese vice minister of foreign affairs, Fu Ying, visited Pyongyang to warn him not to conduct a test. In April, Mr. Kim went ahead anyway with a rocket launching, which fizzled. Last month, Li Jianguo, a member of the Politburo, visited North Korea to again urge restraint.

Despite their displeasure, China’s leaders see little choice but to put up with such indignities.

The slight pique expressed by the Foreign Ministry on Wednesday was not a signal that China would alter its course, the analysts said, or back tougher sanctions at the United Nations.

The official reaction was “very hesitant,” said Jin Canrong, a professor of international relations at Renmin University in Beijing.

After the missile test, Washington immediately started pushing for deeper sanctions at the United Nations and for a tightening of existing sanctions that China agreed to after earlier rocket launchings.

“China will not support a resolution; it will favor a president’s statement,” said Cai Jian, the deputy director of the Center for Korean Studies at Fudan University in Shanghai. A president’s statement at the United Nations is considered a much weaker form of condemnation than sanctions.

A major reason for not backing new sanctions is the fear that they would provoke North Korea to test another nuclear weapon, a far worse prospect than the launching of an unarmed rocket like the one on Wednesday, said Jonathan D. Pollack, a North Korea expert at the Brookings Institution in Washington.

“The North Koreans demurred from a third nuclear test in April, very likely under major Chinese pressure,” Dr. Pollack said.

In 2006 and 2009, North Korea tested a nuclear weapon soon after launching missiles. Dr. Pollack said a repeat of that action would pose a major test to the Obama administration, as well as to the new Chinese leader, Xi Jinping.

“Pyongyang may have decided now is the time to put down a major marker as Obama’s second term approaches and as South Korea elects a new president,” he said.

Beyond the hard strategic questions for the new Chinese leadership, the concerns among ordinary Chinese about why China bankrolls such a ruthless government should be considered, several Chinese analysts said.

“Internally in China, many voices are questioning all this spending on rocket launches instead of on improving people’s livelihoods,” said Jia Qingguo, an expert at Peking University.

The South Korean government recently estimated that North Korea had spent $2.8 billion to $3.2 billion since 1998 on its missile program, said Stephan M. Haggard, a professor of Korea-Pacific studies at the University of California, San Diego. That amount of money would have bought enough corn to feed the country for about three years, Dr. Haggard said.

The debate within China about its relationship with North Korea stems from the unusual nature of the alliance. Fundamentally, the two governments do not like each other and harbor deep mutual suspicions, said Stephanie T. Kleine-Ahlbrandt, the China and Northeast Asia project director of the International Crisis Group in Beijing. When North Korean officials visited Singapore this year to get new ideas for Mr. Kim’s government, leaders in Beijing — who have sent teams of their own to Singapore to study its softer form of one-party leadership — became very nervous, she said.

The larger fear is that any fundamental change in North Korea could send waves of refugees into China, who would be considerably more difficult to absorb than people of other nationalities on China’s borders.

“For the Chinese,” Ms. Kleine-Ahlbrandt said, “there are fewer problems keeping North Korea the way it is than having a collapse.”

Bree Feng contributed research.

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Look How Much of the World Doesn’t Use Social Media (or the Internet)

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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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Fewer health care options for illegal immigrants

ALAMO, Texas (AP) — For years, Sonia Limas would drag her daughters to the emergency room whenever they fell sick. As an illegal immigrant, she had no health insurance, and the only place she knew to seek treatment was the hospital — the most expensive setting for those covering the cost.

The family's options improved somewhat a decade ago with the expansion of community health clinics, which offered free or low-cost care with help from the federal government. But President Barack Obama's health care overhaul threatens to roll back some of those services if clinics and hospitals are overwhelmed with newly insured patients and can't afford to care for as many poor families.

To be clear, Obama's law was never intended to help Limas and an estimated 11 million illegal immigrants like her. Instead, it envisions that 32 million uninsured Americans will get access to coverage by 2019. Because that should mean fewer uninsured patients showing up at hospitals, the Obama program slashed the federal reimbursement for uncompensated care.

But in states with large illegal immigrant populations, the math may not work, especially if lawmakers don't expand Medicaid, the joint state-federal health program for the poor and disabled.

When the reform has been fully implemented, illegal immigrants will make up the nation's second-largest population of uninsured, or about 25 percent. The only larger group will be people who qualify for insurance but fail to enroll, according to a 2012 study by the Washington-based Urban Institute.

And since about two-thirds of illegal immigrants live in just eight states, those areas will have a disproportionate share of the uninsured to care for.

In communities "where the number of undocumented immigrants is greatest, the strain has reached the breaking point," Rich Umbdenstock, president of the American Hospital Association, wrote last year in a letter to Obama, asking him to keep in mind the uncompensated care hospitals gave to that group. "In response, many hospitals have had to curtail services, delay implementing services, or close beds."

The federal government has offered to expand Medicaid, but states must decide whether to take the deal. And in some of those eight states — including Texas, Florida and New Jersey — hospitals are scrambling to determine whether they will still have enough money to treat the remaining uninsured.

Without a Medicaid expansion, the influx of new patients and the looming cuts in federal funding could inflict "a double whammy" in Texas, said David Lopez, CEO of the Harris Health System in Houston, which spends 10 to 15 percent of its $1.2 billion annual budget to care for illegal immigrants.

Realistically, taxpayers are already paying for some of the treatment provided to illegal immigrants because hospitals are required by law to stabilize and treat any patients that arrive in an emergency room, regardless of their ability to pay. The money to cover the costs typically comes from federal, state and local taxes.

A solid accounting of money spent treating illegal immigrants is elusive because most hospitals do not ask for immigration status. But some states have tried.

California, which is home to the nation's largest population of illegal immigrants, spent an estimated $1.2 billion last year through Medicaid to care for 822,500 illegal immigrants.

The New Jersey Hospital Association in 2010 estimated that it cost between $600 million and $650 million annually to treat 550,000 illegal immigrants.

And in Texas, a 2010 analysis by the Health and Human Services Commission found that the agency had provided $96 million in benefits to illegal immigrants, up from $81 million two years earlier. The state's public hospital districts spent an additional $717 million in uncompensated care to treat that population.

If large states such as Florida and Texas make good on their intention to forgo federal money to expand Medicaid, the decision "basically eviscerates" the effects of the health care overhaul in those areas because of "who lives there and what they're eligible for," said Lisa Clemans-Cope, a senior researcher at the Urban Institute.

Seeking to curb expenses, hospitals might change what qualifies as an emergency or cap the number of uninsured patients they treat. And although it's believed states with the most illegal immigrants will face a smaller cut, they will still lose money.

The potential impacts of reform are a hot topic at MD Anderson Cancer Center in Houston. In addition to offering its own charity care, some MD Anderson oncologists volunteer at a county-funded clinic at Lyndon B. Johnson General Hospital that largely treats the uninsured.

"In a sense we've been in the worst-case scenario in Texas for a long time," said Lewis Foxhall, MD Anderson's vice president of health policy in Houston. "The large number of uninsured and the large low-income population creates a very difficult problem for us."

Community clinics are a key part of the reform plan and were supposed to take up some of the slack for hospitals. Clinics received $11 billion in new funding over five years so they could expand to help care for a swell of newly insured who might otherwise overwhelm doctors' offices. But in the first year, $600 million was cut from the centers' usual allocation, leaving many to use the money to fill gaps rather than expand.

There is concern that clinics could themselves be inundated with newly insured patients, forcing many illegal immigrants back to emergency rooms.

Limas, 44, moved to the border town of Alamo 13 years ago with her husband and three daughters. Now single, she supports the family by teaching a citizenship class in Spanish at the local community center and selling cookies and cakes she whips up in her trailer. Soon, she hopes to seek a work permit of her own.

For now, the clinic helps with basic health care needs. If necessary, Limas will return to the emergency room, where the attendants help her fill out paperwork to ensure the government covers the bills she cannot afford.

"They always attended to me," she said, "even though it's slow."

___

Sherman can be followed on Twitter at https://twitter.com/chrisshermanAP .

Plushnick-Masti can be followed on Twitter at https://twitter.com/RamitMastiAP .

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Euro, shares edge higher ahead of PMI data

LONDON (Reuters) - European shares and the euro edged up and growth-sensitive commodities firmed on Friday, after a pick-up in China's manufacturing sector lifted sentiment ahead of closely-watched European data.

Europe will get the first reading of Purchasing Manager Index manufacturing data just before 0900 GMT with investors hoping to see signs the region's struggling economy is readying for a pick-up.

After more than eight hours of late-night talks at a summit in Brussels, EU leaders also provided a fillip for markets, promising to push ahead with a pan-euro zone mechanism to wind down problem banks.

European shares <.stoxx50e> opened 0.1 percent higher, pushing back towards an 18-month high. London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> climbing between 0.1 and 0.3 percent.

"Every minor dip is bought up pretty quickly afterwards," said Central Markets senior broker Joe Neighbor. "I can't really see any big sell-off between now and the end of the year. I expect the markets to continue to grind higher."

Following a mixed session for Asian equities, the early European rises left the MSCI index of global stocks <.miwd00000pus> just above flat at 331 points, adding to a 6 percent rise over the last three weeks.

In the currency market, the brighter mood in the region helped the euro remain above $1.31 near a nine-day high. Dovetailing the move, demand for German government bonds dipped and oil and copper prices edged higher.

A deteriorating business sentiment survey and expectations that the Bank of Japan will ease policy further to support the weak economy next week pushed the yen to a near 9-month low against the dollar and an 8-month low against the euro, however.

China shares outperformed Asian peers after the HSBC flash purchasing managers' index for December hit a 14-month high of 50.9, the fifth straight monthly gain, underlining the world number two economy's improving growth prospects.

(Additional reporting by Sudip Kar-Gupta; editing by Philippa Fletcher)

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India Ink: The Guns N' Roses Concert in Gurgaon, India, Featured Axl Rose's Trademark Vocals and A Clash Among Band Members

The legendary American rock band Guns N’ Roses made the outsourcing boomtown of Gurgaon the last stop on their debut tour of India Wednesday night, a tour 20 years in the making.

In 1992, the band had been slated to play Mumbai (then Bombay), but cancelled after riots that pitted Hindus against Muslims shook the city. They played Israel instead.

The show in Gurgaon, just outside New Delhi, hit all of the band’s high notes, including anthems like “Patience” and “Sweet Child O’ Mine,” but also the kind of low that has haunted it for decades: an apparent squabble between band members toward the end.

The venue was the so-called Leisure Valley, a bare patch of earth in the center of Gurgaon’s business district, a clutch of high-rises housing the Indian offices of international companies like Google and Accenture. A crowd of about 8,000, just over half the venue’s capacity, turned up for the show, made up of office workers in suits and ties, college students in black T-shirts and even entire families.

The band’s leader, Axl Rose, took the stage exactly on time amid roaring guitar riffs, and the band thundered immediately into the title track of their latest album, “Chinese Democracy.” Dubbed “the Titanic of rock albums” by the New York Times critic Jon Pareles when it came out in 2008, “Chinese Democracy” took 15 years to make and may be the most expensive album ever produced.

The crowd, mostly familiar with earlier albums like “Appetite for Destruction,” struggled to recognize the opening song. But they warmed up as the guitarist DJ Ashba teased into the anthemic introductory notes of “Welcome to the Jungle.”

As Mr. Rose began his trademark shrieking vocals, the crowd seemed to hold its  breath, perhaps collectively wondering if the 50-year-old still had the pipes. By the end of the show, it was clear that the growl of the ’90s was missing, but for a not-so-healthy looking guy, he sounded good. Those legendary screams in songs like “Welcome to the Jungle,” “Live and Let Die” and “Paradise City” were close enough to the originals to give a slight tingle to the spine.

In all, the band played a three-hour set, rolling out newer songs and revisiting some  classics like “It’s So Easy” and “Mr. Brownstone,” as well as throwing in a handful of covers, such as Pink Floyd’s “Another Brick in the Wall.”

But Guns N’ Roses’ trademark epic ballads didn’t always fare so well. “Estranged,” from the “Use Your Illusion” double album, was a particular test – the band only managed to play a passable version of the melody-heavy, nine-minute piece of musical theater.  It wasn’t something the purest Guns N’ Roses fans (and I include myself in that camp) were happy about.  That sometimes-ethereal piece of music calls for three good guitarists, and the three on stage were mediocre.

Much of the crowd seemed to be hearing the songs from “Chinese Democracy” for the first time, but the melodious grooves of “This I Love,” “Street of Dreams” and “Catcher in the Rye” seemed to hit the right nerve, and attendees swayed in time.

The band really got the crowd’s attention, though, by throwing in a cover of AC/DC’s “Riff Raff.”

In true Indian fashion, hawkers sold popcorn and peanuts during the show. Looking at the eclectic mix of concertgoers, which seemed to include both middle-aged parents bringing their kids and kids bringing their middle-aged parents, it seemed that more than one generation had been waiting for this concert to happen.

Each band member got a showcase song: the bassist Tommy Stinson sang one of his own, called “Motivation,” while the pianist Dizzy Reed did a rendition of Led Zeppelin’s classic “No Quarter.” (View the entire set list here.)

The song that got the loudest crowd response was, as expected, the seminal “Sweet Child O’ Mine,” with its instantly recognizable opening guitar riff. This was quickly followed by two other Gunners classics, “November Rain” and “Don’t Cry.” The latter was the 23rd song of the night, and Mr. Rose was both visibly and vocally drained.

Still, the band went through “Civil War” and “Nightrain” before exiting the stage, leaving concertgoers wondering aloud whether it was over or not. (Concerts of this scale in Delhi are still rare, so many people didn’t know whether to expect an encore or not.)

Amidst chants for an encore, Mr. Rose came back onstage and declared himself happy to be playing in India. “This has been a longtime dream,” he said. Then he dedicated  the entire show to Ravi Shankar, the Indian sitar maestro who died on Tuesday. The dedication was followed by an acoustic jam between the guitarists Ron “Bumblefoot” Thal and DJ Ashba, then the mellow classic “Patience.”

As the clock neared 10 p.m., the opening riff to “Paradise City” blared through the speakers. The band had managed to finish a three-city tour of India successfully, without any major hiccups, fulfilling the dreams of many in the audience who had craved a chance to see their music heroes from yesteryear live.

But it was not over yet. After all, what is Guns N’ Roses without some drama?

After the band came out together for a final bow, Mr. Rose seemed to decide he still had one more song in him. He called the band members back on stage. Mr. Stinson seemed to balk: he was visible from where I sat nearly throwing his bass backstage, as a roadie tried to stop him.

The rest of the band started playing “Nice Boys” from “Rose Tattoo,” but Mr. Stinson didn’t come onstage. Mr. Rose disappeared backstage, and reappeared moments later. He was followed by Mr. Stinson, who threw his bass onto a pile of equipment, flipped the middle finger at some crew members and left. The band finished the last song without a bassist.

Kabir Taneja is a freelance journalist who owns all of the Guns N’ Roses albums, including “Chinese Democracy.” You can contact him on Twitter @KabirTaneja.

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Google Maps makes its way back to the iPhone

(Reuters) – Google‘s navigation tool has returned to the iPhone, months after Apple‘s home-grown mapping service flopped, prompting user complaints, the firing of an executive and a public apology from Apple’s CEO.

The Google Maps app will be compatible with any iPhone or iPod Touch that runs iOS 5.1 or higher, the company said in a blog post. (http://link.reuters.com/jek64t)

Apple launched its own service in early September, and dropped Google Maps, when it launched the iPhone 5 and rolled out iOS 6, an upgrade to its mobile software platform.

Users complained that Apple’s new map service, based on Dutch navigation equipment and digital map maker TomTom’s data, contained errors and lacked features that made Google Maps popular.

In October, Scott Forstall, a long-time lieutenant of late Apple co-founder Steve Jobs, was asked to leave the company partly because of his refusal to take responsibility for the mishandling of the mapping software.

While Apple Maps offered soaring ‘flyover’ views of major cities, it had no public transit directions, limited traffic information, and obvious mistakes such as putting one city in the middle of the ocean.

This led to Apple chief executive Tim Cook apologizing to customers frustrated with the service and, in an unusual move for the U.S. consumer group, directed them to rival services such as Google’s Maps instead.

(Reporting by Tej Sapru and Ankur Banerjee in Bangalore; Editing by Chris Gallagher and Dan Lalor)

Gadgets News Headlines – Yahoo! News

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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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