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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Microsoft, Motorola file to keep patent case details private

SEATTLE (Reuters) – Microsoft Corp and Google Inc‘s Motorola Mobility unit have requested a federal judge in Seattle to keep secret from the public various details from their recent trial concerning the value of technology patents and the two companies’ attempts at a settlement.

Microsoft and Motorola, acquired by Google earlier this year, are preparing post-trial briefs to present to a judge as he decides the outcome of a week-long trial last month to establish what rates Microsoft should pay Motorola for use of standard, essential wireless technology used in its Xbox game console and other products.

The case is just one strand of litigation in an industry-wide dispute over ownership of the underlying technology and the design of smartphones, which has drawn in Apple Inc, Samsung Electronics Co Ltd, Nokia and others.

In a filing with the Western District of Washington federal court in Seattle on Friday, Microsoft and Motorola asked the judge to allow them to file certain parts of their post-trial submissions under seal and redact those details in the public record.

The details concern terms of Motorola‘s licenses with third parties and Microsoft‘s business and marketing plans for future products. During the trial, which ran from November 13-20, U.S. District Judge James Robart cleared the court when such sensitive or trade secret details were discussed.

“For the same compelling reasons that the court sealed this evidence for purposes of trial, it would be consistent and appropriate to take the same approach in connection with the parties’ post-trial submissions,” the two companies argued in the court filing.

The judge has so far been understanding of the companies’ desire to keep private details of their patent royalties and future plans, although that has perplexed some spectators who believe trials in public courts should be fully open to the public.

In addition, Motorola asked the judge to seal some documents relating to settlement negotiations between the two companies, arguing that keeping those details secret would encourage openness in future talks and make a settlement more likely.

Judge Robart is not expected to rule on the case until the new year.

The case in U.S. District Court, Western District of Washington is Microsoft Corp. vs. Motorola Inc., 10-cv-1823.

(Reporting by Bill Rigby; Editing by Richard Chang)

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Gunman's Father and Brother Are 'in Shock,' Says a Source

By Diane Herbst

12/14/2012 at 08:50 PM EST

State police personnel lead children to safety away from the Sandy Hook Elementary School

Shannon Hicks/Newtown Bee/Reuters/Landov

The father and older brother of the gunman who was blamed for the Connecticut school shooting are being questioned by authorities but are not suspects, a law enforcement source tells PEOPLE.

The Associated Press reports that the gunman has been identified as 20-year-old Adam Lanza.

His unidentified father, who lives in New York City, and his older brother, Ryan, 24, of Hoboken, N.J., are "in shock," the law enforcement source tells PEOPLE.

They were being questioned by the FBI in the Hoboken police station but "are not suspects, they have no involvement," the source says.

"Imagine the 24 year old – he's lost his mother. Imagine the father, his son killed 20 kids," the source says."   

As for Adam, "It looks like there's mental history there," the law enforcement source says.

Adam Lanza died at the scene of the shooting that killed 20 children and six adults at the Sandy Hook Elementary School in Newtown, Conn.

His mother, Nancy Lanza, was found dead at her home, according to CNN.

The source describes the weapons used by Lanza as "legitimate." According to CNN, Lanza used two hand guns that were registered to his mother and a rifle.

Adam's parents were no longer together, the source says.   

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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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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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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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Asian shares rise, yen falls after Fed's stimulus steps

TOKYO (Reuters) - Asian shares extended gains for a seventh day on Thursday, after the U.S. Federal Reserve took new stimulus steps to bolster the economy, pressuring the yen with expectations the Japanese central bank will follow suit with more easing next week.

While stocks gained, oil and gold fell from post-Fed rallies, as investors took profits ahead of the year-end.

Despite the Fed's fresh dose of liquidity-pumping measures, the upside for stocks was also contained by concerns about the lack of breakthrough in U.S. budget talks to avert the "fiscal cliff," some $600 billion of tax hikes and spending cuts scheduled to start in January.

Failure to reach a compromise by the end of the year risks pushing the U.S. economy into recession and has stoked fears that a fragile recovery trend emerging in China and some other countries would be stifled.

U.S. stocks ended little changed on Wednesday, giving up most of the day's gains after Fed Chairman Ben Bernanke warned of damage from the "fiscal cliff", and as U.S. House of Representatives Speaker John Boehner said "serious differences" remain with President Barack Obama.

MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> added 0.3 percent to a 16-month peak, having hit successive 16-month highs since December 5. South Korean shares <.ks11> hit a two-month high and were last up 0.5 percent.

"The Fed's easing measures met the market's expectations, while the setting of clear inflation and unemployment targets exceeded hopes and will clear uncertainty on the monetary front," said Kim Yong-goo, an analyst at Samsung Securities.

The U.S. central bank, cut its forecasts for economic growth and inflation next year, committed to monthly purchases of $45 billion in Treasuries on top of the $40 billion per month in mortgage-backed bonds it started buying in September.

But it also took the unprecedented step of indicating interest rates would remain near zero until unemployment falls to at least 6.5 percent.

YEN WEAKNESS CONTINUES

The dollar advanced to its loftiest in nearly nine months against the yen, touching a high of 83.44 yen. The yen's slump boosted Japan's Nikkei share average <.n225> up 1.6 percent and above 9,700 for the first time in eight months. <.t/>

The Bank of Japan meets December 19-20 and is widely expected to further ease monetary policy to support its weak economy.

The Fed's latest move to make the jobless rate a target for its monetary policy could have a longer-term implication on the BOJ.

"While the BOJ's ultimate goal is to pull Japan out of deflation, the Fed's latest move could prompt Japanese politicians or the government to urge the BOJ to also commit itself to growth, not just price stability," said Chotaro Morita, chief fixed income strategist at Barclays.

Morita said that market consensus is for the BOJ to expand its asset-buying and lending program, currently at 91 trillion yen ($1.1 trillion), by another 5-10 trillion yen, and put off taking bolder steps until after a new cabinet is formed.

Japan holds an election on Sunday, with opinion surveys showing conservative former Prime Minister Shinzo Abe's opposition Liberal Democratic Party and its smaller ally heading for a resounding victory.

Abe wants to step up aggressive monetary easing along with heavy public works spending, policy prescriptions dubbed "Abenomics" by the media, and while his threat to curtail the BOJ's independence has unsettled investors, investors reckon the responsibility of power will prevent Abe taking excessive risks that could lead to a bond market meltdown.

The euro was relatively less volatile compared to the dollar and the yen, steadying around $1.3066 after reaching a high of $1.3098 on Wednesday.

Greece's foreign lenders welcomed a bond buyback even though it narrowly fell short of a target to cut the country's debt, paving the way for Athens to get long-delayed aid to avoid bankruptcy.

In Italy, another debt-straddled euro zone country, Silvio Berlusconi offered to stand back and make way for Mario Monti as Italy's next leader if the outgoing technocrat premier agreed to run as the candidate for a center-right coalition. Monti's intention to resign has raised concerns that his austerity policies may not be carried out.

Oil prices retreated from overnight rises, with U.S. crude futures easing 0.3 percent to $86.48 a barrel and Brent falling 0.5 percent to $109.01.

Gold tumbled more than 1 percent on stop-loss selling, after the Fed's announcement of a fresh round of bond buying lifted prices to their highest levels in nearly two weeks. Spot gold dropped 1 percent to $1,694.16.

($1 = 82.9300 Japanese yen)

(Additional reporting by Somang Yang in Seoul; Editing by Jacqueline Wong)

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