Clinton Warns Syria Against Using Chemical Weapons

WASHINGTON — The Obama administration said Monday that it is worried that Syria’s embattled government may be preparing to use chemical weapons against the opposition and warned that doing so “would cross a red line for the United States” and prompt American action.

The White House said that some recent actions by the government of President Bashar al-Assad were indicators that such weapons could be deployed soon, following earlier reports that intelligence agencies had noticed signs of activity at chemical weapons sites.

“We have an increased concern about the possibility of the regime taking the desperate act of using its chemical weapons,” said Jay Carney, the White House press secretary. He said such a move “would cross a red line for the United States. The Assad regime must know that the world is watching and that they will be held accountable by the United States and the international community if they use chemical weapons or fail to secure them.”

Mr. Carney hinted at possible military action in response, although he declined to specify what options President Obama would consider. “We think it is important to prepare for all scenarios,” Mr. Carney said. “Contingency planning is the responsible thing to do.”

The White House statements on Syria echoed and amplified similar warnings issued by Secretary of State Hillary Rodham Clinton earlier in the day in Prague, the Czech capital, where she was stopping on her way to meetings in Brussels.

“This is a red line for the United States,” Mrs. Clinton said, using the same language that the White House later would use. “I am not going to telegraph in any specifics what we would do in the event of credible evidence that the Assad regime has resorted to using chemical weapons against their own people. But suffice it to say we are certainly planning to take action if that eventuality were to occur.”

There have been signs in recent days of heightened activity at some of Syria’s chemical weapons sites, according to American and Israeli officials familiar with intelligence reports. Mrs. Clinton did not confirm the intelligence reports or say what sort of activity was occurring.

The Syrian Foreign Ministry, in a swift response, said the government “would not use chemical weapons, if it had them, against its own people under any circumstances.” The statement was reported on Syrian state television and on the Lebanese channel LBC.

The warning from the White House came as the spokesman for Syria’s foreign ministry, Jihad Makdissi, was reported by the Hezbollah-run television station, Al Manar, as having been fired, although Lebanese news Web sites reported the departure as a defection. Mr. Makdissi, who was thought to be in Europe on Monday, was one of the highest ranking Christians to defect, and his polished persona and fluent English had long made him one of the most cosmopolitan faces of the government.

In recent months he had not taken phone calls and had not made public statements, leading some to speculate that he had either fallen out of favor or had doubts about the regime.

Mr. Maqdissi had been one of the most accessible Syrian officials for foreign journalists. Al Manar reported that he was fired for making statements that did not reflect the government’s point of view, though it was unclear what those statements might have been.

The crisis has been worsening in Syria, where about 40,000 people have been killed in 20 months of conflict. On Monday, the United Nations regional humanitarian coordinator for Syria, Radhouane Nouicer, said that they were pulling nonessential international staff out of the country because of the security situation, The Associated Press reported.

Mrs. Clinton, who made her comments after meeting with Karel Schwarzenberg, the foreign minister of the Czech Republic, indicated that they had discussed the situation in Syria, including the potential chemical weapons threat.

Mr. Schwarzenberg described the situation in Syria as “rather chaotic” and “highly dangerous.” He said that Czech troops who specialize in the detection of chemical weapons and decontamination were in Jordan training with forces there.

An American task force has been deployed to Jordan and has been helping the Jordanians deal with an escalating humanitarian crisis centered on Syria, including an exodus of more than 200,000 refugees from Syria to Jordan. The force is also planning how to respond, if necessary, to a chemical weapons threat.

Mrs. Clinton stopped in Prague on her way to Brussels for a meeting of NATO foreign ministers. A major topic of the NATO meeting is a Turkish request that the alliance deploy Patriot antimissile batteries in Turkey. The Turkish government is concerned about Syria’s ballistic missiles, which could carry chemical weapons, and it wants NATO to guard as many as 10 sites inside Turkey.

Peter Baker reported from Washington, D.C. and Michael R. Gordon reported from Prague. Anne Barnard contributed reporting from Beirut, Lebanon.

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Obama Is Taking Himself and #My2K to Twitter This Afternoon

What a day for Twitter! First the Pope, then the Royal Baby, and now President Obama will come online to answer questions about the fiscal cliff. A @WhiteHouse tweet with the distincitive “-bo” signature, announced not long ago that the big guy himself will be taking questions online, starting at 2:00 p.m. ET.

Good to see lots of folks on twitter speaking out on extending middle class tax cuts. I’ll answer some Qs on that at 2ET. Ask w/ #My2k –bo

— The White House (@whitehouse) December 3, 2012

Unfortunately, he’s sticking with the troublesome #My2K hashtag that conservatives have already seized upon in a back-and-forth battle for messaging. Trying to mobilize your supporters through social media is all well and good, but the problem with any genuinely open town hall, is that anyone can invite themselves—even those who disagree with you and might be louder than your friends. (Plus, any reasonably popular hashtag moves much to fast for anyone to follow it or have an actual conversation on Twitter anyway.)

RELATED: Don’t Expect Too Much From Social Media Town Halls

But ask away! Maybe you’ll get luck and get RT’d by the President himself. And then find yourself becoming the next conservative meme as soon as the hashtag-averse pundits start making fun of your question. Should be a fun afternoon.

Social Media News Headlines – Yahoo! News

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Congressman Joseph Kennedy III Marries Lauren Birchfield

12/03/2012 at 02:15 PM EST

Joseph Kennedy III and Lauren Anne Birchfield

Victor Sizemore Photography

Happy news for the Kennedy family: Congressman-elect Joe Kennedy III is a married man.

The newly-elected politician wed fiancée Lauren Birchfield on Saturday at the Community Church in Corona del Mar, Calif., his office tells NBC News. The ceremony was officiated by her father, the Rev. Jim Birchfield.

Kennedy, 32, and Birchfield, 28, met at Harvard Law School, and they were married in front of family and friends.

"The bride and groom are extremely grateful for all the well wishes and for the outpouring of support and friendship they have received this year," the newlyweds say in a statement to NBC News.

Kennedy III, the son of former Rep. Joseph Kennedy II, and Robert F. Kennedy's grandson, represents Massachusetts's 4th Congressional District.

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Asperger's dropped from revised diagnosis manual

CHICAGO (AP) — The now familiar term "Asperger's disorder" is being dropped. And abnormally bad and frequent temper tantrums will be given a scientific-sounding diagnosis called DMDD. But "dyslexia" and other learning disorders remain.

The revisions come in the first major rewrite in nearly 20 years of the diagnostic guide used by the nation's psychiatrists. Changes were approved Saturday.

Full details of all the revisions will come next May when the American Psychiatric Association's new diagnostic manual is published, but the impact will be huge, affecting millions of children and adults worldwide. The manual also is important for the insurance industry in deciding what treatment to pay for, and it helps schools decide how to allot special education.

This diagnostic guide "defines what constellations of symptoms" doctors recognize as mental disorders, said Dr. Mark Olfson, a Columbia University psychiatry professor. More important, he said, it "shapes who will receive what treatment. Even seemingly subtle changes to the criteria can have substantial effects on patterns of care."

Olfson was not involved in the revision process. The changes were approved Saturday in suburban Washington, D.C., by the psychiatric association's board of trustees.

The aim is not to expand the number of people diagnosed with mental illness, but to ensure that affected children and adults are more accurately diagnosed so they can get the most appropriate treatment, said Dr. David Kupfer. He chaired the task force in charge of revising the manual and is a psychiatry professor at the University of Pittsburgh.

One of the most hotly argued changes was how to define the various ranges of autism. Some advocates opposed the idea of dropping the specific diagnosis for Asperger's disorder. People with that disorder often have high intelligence and vast knowledge on narrow subjects but lack social skills. Some who have the condition embrace their quirkiness and vow to continue to use the label.

And some Asperger's families opposed any change, fearing their kids would lose a diagnosis and no longer be eligible for special services.

But the revision will not affect their education services, experts say.

The new manual adds the term "autism spectrum disorder," which already is used by many experts in the field. Asperger's disorder will be dropped and incorporated under that umbrella diagnosis. The new category will include kids with severe autism, who often don't talk or interact, as well as those with milder forms.

Kelli Gibson of Battle Creek, Mich., who has four sons with various forms of autism, said Saturday she welcomes the change. Her boys all had different labels in the old diagnostic manual, including a 14-year-old with Asperger's.

"To give it separate names never made sense to me," Gibson said. "To me, my children all had autism."

Three of her boys receive special education services in public school; the fourth is enrolled in a school for disabled children. The new autism diagnosis won't affect those services, Gibson said. She also has a 3-year-old daughter without autism.

People with dyslexia also were closely watching for the new updated doctors' guide. Many with the reading disorder did not want their diagnosis to be dropped. And it won't be. Instead, the new manual will have a broader learning disorder category to cover several conditions including dyslexia, which causes difficulty understanding letters and recognizing written words.

The trustees on Saturday made the final decision on what proposals made the cut; recommendations came from experts in several work groups assigned to evaluate different mental illnesses.

The revised guidebook "represents a significant step forward for the field. It will improve our ability to accurately diagnose psychiatric disorders," Dr. David Fassler, the group's treasurer and a University of Vermont psychiatry professor, said after the vote.

The shorthand name for the new edition, the organization's fifth revision of the Diagnostic and Statistical Manual, is DSM-5. Group leaders said specifics won't be disclosed until the manual is published but they confirmed some changes. A 2000 edition of the manual made minor changes but the last major edition was published in 1994.

Olfson said the manual "seeks to capture the current state of knowledge of psychiatric disorders. Since 2000 ... there have been important advances in our understanding of the nature of psychiatric disorders."

Catherine Lord, an autism expert at Weill Cornell Medical College in New York who was on the psychiatric group's autism task force, said anyone who met criteria for Asperger's in the old manual would be included in the new diagnosis.

One reason for the change is that some states and school systems don't provide services for children and adults with Asperger's, or provide fewer services than those given an autism diagnosis, she said.

Autism researcher Geraldine Dawson, chief science officer for the advocacy group Autism Speaks, said small studies have suggested the new criteria will be effective. But she said it will be crucial to monitor so that children don't lose services.

Other changes include:

—A new diagnosis for severe recurrent temper tantrums — disruptive mood dysregulation disorder. Critics say it will medicalize kids' who have normal tantrums. Supporters say it will address concerns about too many kids being misdiagnosed with bipolar disorder and treated with powerful psychiatric drugs. Bipolar disorder involves sharp mood swings and affected children are sometimes very irritable or have explosive tantrums.

—Eliminating the term "gender identity disorder." It has been used for children or adults who strongly believe that they were born the wrong gender. But many activists believe the condition isn't a disorder and say calling it one is stigmatizing. The term would be replaced with "gender dysphoria," which means emotional distress over one's gender. Supporters equated the change with removing homosexuality as a mental illness in the diagnostic manual, which happened decades ago.

___

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

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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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Tunnel Collapses Outside Tokyo, Trapping Motorists

Kyodo News, via Associated Press

A surveillance camera within the Sasago tunnel showed rescue workers at the scene of a collapse on Sunday.

TOKYO — At least seven people were feared dead after a highway tunnel collapsed on Sunday in eastern Japan, trapping them in their vehicles and starting a fire that filled the passage with thick, black smoke.

Franck Robichon/European Pressphoto Agency

Fire fighters and rescue personnel gathered at the entrance to the Sasago tunnel, west of Tokyo.

Three vehicles appeared to have been crushed under concrete that fell from the ceiling of the three-mile Sasago Tunnel near the city of Otsuki in Yamanashi Prefecture, about 50 miles west of Tokyo, the national disaster management agency said. Officials from the agency and the police said it remained unclear why a section of the tunnel — 150 to 200 feet of eight-inch-thick concrete that weighed about 180 tons — suddenly fell.

A vehicle carrying six people caught fire, whose heavy smoke initially prevented firefighters from entering the tunnel. But even after putting out the blaze, rescuers had to temporarily suspend efforts to reach the vehicles inside because of the danger of a further collapse, officials said.

Rescue efforts resumed later in the day, though progress was slow.

A 28-year-old woman managed to escape from the vehicle that caught fire, officials said. She told firefighters that five other people remained inside. It was unclear how many people were in the other trapped vehicles besides the drivers.

One of the other vehicles appeared to be a truck belonging to a food wholesaler, officials said. The truck’s driver called his company right after the accident to ask for help, they said, but officials were later unable to reach him on his cellphone.

The operator of the highway, the Central Nippon Expressway, held a news conference to apologize for the accident. The police said they had opened an investigation into the cause of the collapse and about whether professional negligence by the operator was a factor.

The accident closed a section of the Chuo Expressway, which connects Tokyo to western Japan. Such long tunnels — usually lined with smooth, white concrete — are common on highways in the mountainous island nation.

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Apple to sell new iPads, iPhone 5 in China in Dec.

CUPERTINO, Calif. (AP) — Apple Inc. on Friday said its latest iPad models will go on sale in China on Dec. 7, followed by the iPhone 5 a week later.

China is one of Apple‘s largest and fastest-growing markets. Analyst Brian White at Topeka Capital Markets said iPhone 5 is launching roughly when he expected it, but he hadn’t expected the iPad mini and the fourth-generation, full-size iPad to go on sale in China this year.

“Our conversations during our meetings and casual consumer interactions during our China trips tell us that the iPad Mini will take off like wildfire in China,” White wrote in a research report Friday morning. “The smaller form factor and lower price point, we believe Apple will be able to sell the iPad mini in meaningful volumes.”

White said uptake of the iPhone 4S was relatively slow in China, because the signature new feature, voice-recognition-powered virtual assistant Siri, did not understand Mandarin Chinese. With this year’s software update, Siri now does understand the language, which should encourage upgrades, he said.

Gadgets News Headlines – Yahoo! News

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Shania Twain Kicks Off Vegas Show

By Mark Gray

12/02/2012 at 02:30 PM EST

Shania Twain in Las Vegas Dec. 1

Jeff Bottari/Getty

Shania Twain still feels like a woman. And now she feels like a Las Vegas headliner.

The Canadian singer kicked off her two-year residency Saturday at Vegas's Caesars Palace with a 90-minute show that features many of her hits and takes the crowd on what she calls a "personal journey."

"The show is very fun for me," Twain, 47, told reporters Saturday. "I was a bit worried that we were staying in the same place. Was I going to lose that edge? But I've never had a show this exciting before."

In fact, her commitment to the show is so intense that she's gone an entire week without seeing the sun (in a town that is famously showered in sunshine) in preparation for her opening night.

It paid off.

Taking the stage for the first time in eight years, Twain appeared giddy and her voice sounded as strong as it did when she was pumping out Grammy-winning songs like "You're Still The One" in the late 90s.

Asked how nervous she was about taking the stage again, Twain said, "I'm actually pretty good."

Her comfort, she said, comes from surrounding herself with things she loves on stage and her husband, Frédéric Thiébaud, who may be her biggest supporter.

"I cannot live without him," she said. "I need that support. I just need what we have. It grounds me every day and reminds me that there are a lot of important things going on in the world."

Added Twain: "He keeps it all in perspective."

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South Africa makes progress in HIV, AIDS fight

JOHANNESBURG (AP) — In the early '90s when South Africa's Themba Lethu clinic could only treat HIV/AIDS patients for opportunistic diseases, many would come in on wheelchairs and keep coming to the health center until they died.

Two decades later the clinic is the biggest anti-retroviral, or ARV, treatment center in the country and sees between 600 to 800 patients a day from all over southern Africa. Those who are brought in on wheelchairs, sometimes on the brink of death, get the crucial drugs and often become healthy and are walking within weeks.

"The ARVs are called the 'Lazarus drug' because people rise up and walk," said Sue Roberts who has been a nurse at the clinic , run by Right to Care in Johannesburg's Helen Joseph Hospital, since it opened its doors in 1992. She said they recently treated a woman who was pushed in a wheelchair for 3 kilometers (1.8 miles) to avoid a taxi fare and who was so sick it was touch and go. Two weeks later, the woman walked to the clinic, Roberts said.

Such stories of hope and progress are readily available on World AIDS Day 2012 in sub-Saharan Africa where deaths from AIDS-related causes have declined by 32 percent from 1.8 million in 2005 to 1.2 million in 2011, according to the latest UNAIDS report.

As people around the world celebrate a reduction in the rate of HIV infections, the growth of the clinic, which was one of only a few to open its doors 20 years ago, reflects how changes in treatment and attitude toward HIV and AIDS have moved South Africa forward. The nation, which has the most people living with HIV in the world at 5.6 million, still faces stigma and high rates of infection.

"You have no idea what a beautiful time we're living in right now," said one of the doctors at the clinic, Dr. Kay Mahomed, over the chatter of a crowd of patients outside her door.

President Jacob Zuma's government decided to give the best care, including TB screening and care at the clinic, and not to look at the cost, she said. South Africa has increased the numbers treated for HIV by 75 percent in the last two years, UNAIDS said, and new HIV infections have fallen by more than 50,000 in those two years. South Africa has also increased its domestic expenditure on AIDS to $1.6 billion, the highest by any low-and middle-income country, the group said.

Themba Lethu clinic, with funding from the government, the United States Agency for International Development and the United States President's Emergency Plan for AIDS Relief, is now among some 2,500 anti-retroviral therapy facilities in the country that treat approximately 1.9 million people.

"Now, you can't not get better. It's just one of these win-win situations. You test, you treat and you get better, end of story," Mahomed said.

But it hasn't always been that way.

In the 1990s South Africa's problem was compounded by years of misinformation by President Thabo Mbeki, who questioned the link between HIV and AIDS, and his health minister, Manto Tshabalala-Msimang, who promoted a "treatment" of beets and garlic.

Christinah Motsoahae first found out she was HIV positive in 1996, and said she felt nothing could be done about it.

"I didn't understand it at that time because I was only 24, and I said, 'What the hell is that?'" she said.

Sixteen years after her first diagnosis, she is now on anti-retroviral drugs and her life has turned around. She says the clinic has been instrumental. To handle the flow of patients, they're electronically checked in at reception, several nursing stations with partitions are set up to check vital signs and a new machine even helps dispense medicine to the pharmacists.

"My status has changed my life, I have learned to accept people the way they are. I have learned not to be judgmental. And I have learned that it is God's purpose that I have this," the 40-year-old said.

She works with a support group of "positive ladies" in her hometown near Krugersdorp. She travels to the clinic as often as needed and her optimism shines through her gold eye shadow and wide smile. "I love the way I'm living now."

Motsoahae credits Nelson Mandela's family for inspiring her to face up to her status. The anti-apartheid icon galvanized the AIDS community in 2005 when he publicly acknowledged his son died of AIDS.

Motsoahae is among about a hundred people waiting in a room to see one of about 10 doctors or to collect medications. A woman there rises up, slings her baby behind her back in a green fleece blanket, and tries to leave by zigzagging through the intercrossing legs of those seated.

None of Motsoahae's children was born with HIV. The number of children newly infected with HIV has declined significantly. In six countries in sub-Saharan Africa — South Africa, Burundi, Kenya, Namibia, Togo and Zambia —the number of children with HIV declined by 40 to 59 percent between 2009 and 2011, the UNAIDS report said.

But the situation remains dire for those over the age of 15, who make up the 5.3 million of those infected in South Africa. Fear and denial lend to the high prevalence of HIV for that age group in South Africa, said the clinic's Kay Mahomed.

About 3.5 million South Africans still are not getting therapy, and many wait too long to come in to clinics or don't stay on the drugs, said Dr. Dave Spencer, who works at the clinic .

"People are still afraid of a stigma related to HIV," he said, adding that education and communication are key to controlling the disease.

Themba Lethu clinic reaches out to the younger generation with a teen program.

Tshepo Hoato, 21, who helps run the program found out he was HIV positive after his mother died in 2000. He said he has been helped by the program in which teens meet one day a month.

"What I've seen is a lot people around our ages, some commit suicide as soon as they find out they are HIV. That's a very hard stage for them so we came up with this program to help one another," he said. "We tell them our stories so they can understand and progress and see that no, man, it's not the end of the world."

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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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