Investors face another Washington deadline

NEW YORK (Reuters) - Investors face another Washington-imposed deadline on government spending cuts next week, but it's not generating the same level of fear as two months ago when the "fiscal cliff" loomed large.

Investors in sectors most likely to be affected by the cuts, like defense, seem untroubled that the budget talks could send stocks tumbling.

Talks on the U.S. budget crisis began again this week leading up to the March 1 deadline for the so-called sequestration when $85 billion in automatic federal spending cuts are scheduled to take effect.

"It's at this point a political hot button in Washington but a very low level investor concern," said Fred Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. The fight pits President Barack Obama and fellow Democrats against congressional Republicans.

Stocks rallied in early January after a compromise temporarily avoided the fiscal cliff, and the Standard & Poor's 500 index <.spx> has risen 6.3 percent since the start of the year.

But the benchmark index lost steam this week, posting its first week of losses since the start of the year. Minutes on Wednesday from the last Federal Reserve meeting, which suggested the central bank may slow or stop its stimulus policy sooner than expected, provided the catalyst.

National elections in Italy on Sunday and Monday could also add to investor concern. Most investors expect a government headed by Pier Luigi Bersani to win and continue with reforms to tackle Italy's debt problems. However, a resurgence by former leader Silvio Berlusconi has raised doubts.

"Europe has been in the last six months less of a topic for the stock market, but the problems haven't gone away. This may bring back investor attention to that," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

OPTIONS BULLS TARGET GAINS

The spending cuts, if they go ahead, could hit the defense industry particularly hard.

Yet in the options market, bulls were targeting gains in Lockheed Martin Corp , the Pentagon's biggest supplier.

Calls on the stock far outpaced puts, suggesting that many investors anticipate the stock to move higher. Overall options volume on the stock was 2.8 times the daily average with 17,000 calls and 3,360 puts traded, according to options analytics firm Trade Alert.

"The upside call buying in Lockheed solidifies the idea that option investors are not pricing in a lot of downside risk in most defense stocks from the likely impact of sequestration," said Jared Woodard, a founder of research and advisory firm condoroptions.com in Forest, Virginia.

The stock ended up 0.6 percent at $88.12 on Friday.

If lawmakers fail to reach an agreement on reducing the U.S. budget deficit in the next few days, a sequester would include significant cuts in defense spending. Companies such as General Dynamics Corp and Smith & Wesson Holding Corp could be affected.

General Dynamics Corp shares rose 1.2 percent to $67.32 and Smith & Wesson added 4.6 percent to $9.18 on Friday.

EYES ON GDP DATA, APPLE

The latest data on fourth-quarter U.S. gross domestic product is expected on Thursday, and some analysts predict an upward revision following trade data that showed America's deficit shrank in December to its narrowest in nearly three years.

U.S. GDP unexpectedly contracted in the fourth quarter, according to an earlier government estimate, but analysts said there was no reason for panic, given that consumer spending and business investment picked up.

Investors will be looking for any hints of changes in the Fed's policy of monetary easing when Fed Chairman Ben Bernake speaks before congressional committees on Tuesday and Wednesday.

Shares of Apple will be watched closely next week when the company's annual stockholders' meeting is held.

On Friday, a U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with the iPhone maker, blocking the company from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

(Additional reporting by Doris Frankel; Editing by Kenneth Barry)

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IHT Rendezvous: Russian Nationalists Say ‘Nyet’ to Foreign Words

LONDON — Nationalist Russian legislators have introduced a bill to hold back a tide of foreign words, specifically English ones, which they claim is swamping the Russian language.

A bill submitted by the minority Liberal Democratic Party would impose fines of up to $1,700 on officials, advertisers and journalists who use foreign words rather than their Russian equivalents.

Their main gripe appears to be with English words that have crept into Russian since the collapse of the Soviet Union, according to the broadcaster Russia Today.

“They specifically mention the Russian words that ended up as ‘dealer’, ’boutique’, ‘manager’, ‘single’, ‘OK’ and ‘wow’,” RT said on its Web site.

The legislators were said to have taken their inspiration from France and Poland, which have laws to protect their national languages from foreign incursions, and from Quebec, where local officials zealously guard the Canadian province’s French-language tradition.

Given the onward march of English as the dominant world language, the efforts of the language purists may ultimately be doomed.

The tendency of languages to adopt foreign words is scarcely a modern phenomenon. Russian itself has a multitude of borrowings from languages as diverse as Mongolian and Latin.

Borrowings often reflect concepts or linguistic nuances that do not exist in the native language. English borrowed “mammoth” and “sable” from the Russians as well as the more recent “agitprop” and “gulag.”

Alina Sabitova, writing for the Russkiy Mir Foundation, which promotes Russian language and culture, acknowledged that proscriptive laws in countries such as Poland and France were rarely observed in practice.

That cast doubt on the claim of Vladimir V. Zhirinovsky, the Liberal Democratic Party leader, that “all major countries have purged foreign loan words from their national languages.”

The bill appeared to be the latest in a patriotic wave of perceived anti-foreign measures to go before the Duma, the lower house of parliament. My colleague Ellen Barry wrote from Moscow last month that many of the proposals sounded eccentric and were unlikely to advance and become law.

Russia Today got itself in hot water on Thursday with the headline “Grammar Nazi Style” on its report of the proposed ban.

One anonymous commenter suggested those responsible should be sent to the gulags, while another declared:

“Russia needs to protect own language for a million parasite words that have infiltrated the country from the West. Russian language is a very rich language and stupid replacement of Russian words with English is bad for the country and culture.”

The language debate in Russia, as elsewhere, has obvious political overtones, with purists frequently railing against American cultural hegemony and English-language imperialism. (A colleague recalls that one Communist-era Polish language activist took particular exception to the phrase “whiskey on the rocks.”)

Language watchdogs can also fall into the trap of overzealousness.

Quebec’s French language office backed down this week after it provoked a furor by warning the owner of an Italian restaurant that there were too many Italian words on his menu.

Where do you stand on the language issue? Do foreign borrowings enrich languages or diminish them? Is the dominance of English a plus or a minus in an increasingly interconnected world? And will new laws do anything to counter the trend?

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Oscar Pistorius to Be Released on Bail

Breaking News

By Stephen M. Silverman

02/22/2013 at 09:25 AM EST

Oscar Pistorius, Feb. 22, 2013

AP

Prosecutors in South Africa were defeated Friday in their effort to deny bail for "Blade Runner" Oscar Pistorius, the double-amputee track star accused of the premeditated Feb. 14 murder of his girlfriend, Reeva Steenkamp.

Pistorius will be released on U.S. $114,000 bail, CNN reports.

Chief Magistrate Desmond Nair announced his decision in a packed Pretoria courtroom Friday afternoon. Over the past four days during the bail hearing, both authorities and Pistorius's legal team agreed that he killed Steenkamp, 29, but the athlete says he killed her accidentally after he mistook her for an intruder.

In final arguments Friday morning, prosecutor Gerrie Nel, having called the accused a flight risk, told the judge that Pistorius, 26, didn't deserve bail. CNN reports. "He must realize that long-term imprisonment is almost guaranteed," said Nel. "He might think he'll be acquitted."

The prosecutor also said: "We all know that a lot of important people were granted bail and they stayed in the country. But lots of very important people have escaped."

"What kind of life would he lead if he were to flee?" asked the magistrate.

"A life of freedom," Nel replied.

The judge later said in lengthy remarks leading up to his decision Friday that he did not find that it had been established that Pistorius posed a flight risk. Nair also said that he was aware that releasing the accused could lead to "shock and outrage" in the community.

Entering the courtroom Friday, Pistorius bowed his head, and later appeared to be holding back tears when Nel recounted Steenkamp's plight on the fateful night, reports The New York Times.

"I am not saying the planning of the murder of Reeva Steenkamp happened weeks ahead, days ahead," said Nel, according to the newspaper. "I am saying the planning to kill Reeva Steenkamp happened that night."

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Govs to hear Oregon health care plan

SALEM, Ore. (AP) — Oregon Gov. John Kitzhaber will brief other state leaders this weekend on his plan to lower Medicaid costs, touting an overhaul that President Barack Obama highlighted in his State of the Union address for its potential to lower the deficit even as health care expenses climb.

The Oregon Democrat leaves for Washington, D.C., on Friday to pitch his plan that changes the way doctors and hospitals are paid and improves health care coordination for low income residents so that treatable medical problems don't grow in severity or expense.

Kitzhaber says his goal is to win over a handful of other governors from each party.

"I think the politics have been dialed down a couple of notches, and now people are willing to sit down and talk about how we can solve the problem" of rising health care costs, Kitzhaber told The Associated Press in a recent interview.

Kitzhaber introduced the plan in 2011 in the face of a severe state budget deficit, and he's been talking for two years about expanding the initiative beyond his state. Now, it seems he's found people ready to listen.

Hospital executives from Alabama visited Oregon last month to learn about the effort. And the U.S. Department of Health and Human Services announced Thursday that it's giving Oregon a $45 million grant to help spread the changes beyond the Medicaid population and share information with other states, making it one of only six states to earn a State Innovation Model grant.

Kitzhaber will address his counterparts at a meeting of the National Governors Association. His talk isn't scheduled on the official agenda, but a spokeswoman confirmed that Kitzhaber is expected to present.

"The governors love what they call stealing from one another — taking the good ideas and the successes of their colleagues and trying to figure out how to apply that in their home state," said Matt Salo, director of the National Association of Medicaid Directors.

There's been "huge interest" among other states in Oregon's health overhaul, Salo said, not because the concepts are brand new, but because the state managed to avoid pitfalls that often block health system changes.

Kitzhaber persuaded state lawmakers to redesign the system of delivering and paying for health care under Medicaid, creating incentives for providers to coordinate patient care and prevent avoidable emergency room visits. He has long complained that the current financial incentives encourage volume over quality, driving costs up without making people healthier.

Obama, in his State of the Union address this month, suggested that changes such as Oregon's could be part of a long-term strategy to lower the federal debt by reigning in the growing cost of federally funded health care.

"We'll bring down costs by changing the way our government pays for Medicare, because our medical bills shouldn't be based on the number of tests ordered or days spent in the hospital — they should be based on the quality of care that our seniors receive," Obama said.

The Obama administration has invested in the program, putting up $1.9 billion to keep Oregon's Medicaid program afloat over the next five years while providers make the transition to new business models and incorporate new staff and technology.

In exchange, though, the state has agreed to lower per-capita health care cost inflation by 2 percentage points without affecting quality.

The Medicaid system is unique in each state, and Kitzhaber isn't suggesting that other states should adopt Oregon's specific approach, said Mike Bonetto, Kitzhaber's health care policy adviser. Rather, he wants governors to buy into the broad concept that the delivery system and payment models need to change.

That's not a new theory. But Oregon has shown that under the right circumstances massive changes to deeply entrenched business models can gain wide support.

What Oregon can't yet show is proof the idea is working — that it's lowering costs without squeezing on the quality or availability of care. The state is just finishing compiling baseline data that will be used as a basis of comparison.

One factor driving the Obama administration's interest in Oregon's success is the president's health care overhaul. Under the Affordable Care Act, millions more Americans will join the Medicaid rolls after Jan. 1, and the health care system will have to be able to absorb the influx of patients in a logistically and financially sustainable way.

The federal government will pay 100 percent of the costs for those additional patients in the first three years before scaling back to 90 percent in 2020 and beyond.

"There are a lot of governors who are facing the same challenges we're facing in Oregon," Kitzhaber said. "They recognize that the cost of health care is something they're going to have to get their arms around."

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Wall Street opens higher on data, HP earnings

NEW YORK (Reuters) - Stocks opened higher Friday after two days of losses, lifted by better-than-expected earnings from Hewlett-Packard Co and positive economic data from Europe.

HP, a Dow component, jumped 7.4 percent to $18.34 in early trading.

The Dow Jones industrial average <.dji> was up 45.85 points, or 0.33 percent, at 13,926.47. The Standard & Poor's 500 Index <.spx> was up 6.06 points, or 0.40 percent, at 1,508.48. The Nasdaq Composite Index <.ixic> was up 18.48 points, or 0.59 percent, at 3,149.98.

(Reporting by Ryan Vlastelica; Editing by Bernadette Baum)

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The Lede: Reporters in Syria See No End in Sight

It has been nearly two years since Syria’s president, Bashar al-Assad, deployed troops to clear the streets of first peaceful protesters and then armed rebels intent on overthrowing him.

The ensuing war, a mix of the sectarian, political and personal, has turned bustling streets, workplaces and homes across the country into rubble-strewn battlegrounds, contested bitterly for the smallest strategic value. On the front lines in two of the country’s largest cities, Damascus, the capital, and Aleppo, reporters have suggested in recent days that there is no end in sight.

Goran Tomasevic of Reuters, a photographer who has produced some of the conflict’s most telling images, spent a month in what were once suburbs of Damascus. Writing on the Reuters Web site on Wednesday, he described what he called “bloody stalemate.”

I watched both sides mount assaults, some trying to gain just a house or two, others for bigger prizes, only to be forced back by sharpshooters, mortars or sprays of machinegun fire.

As in the ruins of Beirut, Sarajevo or Stalingrad, it is a sniper’s war; men stalk their fellow man down telescopic sights, hunting a glimpse of flesh, an eyeball peering from a crack, use lures and decoys to draw their prey into giving themselves away.

Fighting is at such close quarters that on one occasion a rebel patrol stumbled into an army unit inside a building; hand grenades deafened us and shrapnel shredded plaster, a sudden clatter of Kalashnikov cartridges and bullets coming across the cramped space gave way in seconds to the groans of the wounded.

The division between religious groups, Mr. Tomasevic wrote, has become more distinct:

Days are punctuated by regular halts for prayer in a conflict, now 23 months old, that has become increasingly one pitting Syria’s Sunni Muslim majority, stiffened by Islamist radicals, against Alawites led by Assad; they have support from Iran, from whose Shi’ite Islam their faith is derived.

Typical of the frontline routine was an attack that a couple of dozen men of the brigade Tahrir al-Sham — roughly “Syrian Freedom” — mounted in Ain Tarma on January 30, aiming to take over or at least damage an army checkpoint further up the lane.

I photographed one two-man fire team crouch against a breeze-block garden wall, about 50 meters from their target.

In blue jeans, sneakers and muffled against a morning chill, their role was to wait for comrades to hit the army position with rocket-propelled grenades then rake the soldiers with their AK-47 automatic rifles as they were flushed out into the open.

There was little to make a sound in the abandoned streets. The attackers whispered to each other under their breath.

Then two shots rang out. One of the two riflemen, heavy set and balding, screamed in pain and collapsed back on the tarmac.

The day’s assault was going wrong before it even started.

Ian Pannell of the BBC reported on a similar deadlock, outside Aleppo. “Too much has been lost to talk of winners and losers,” Mr. Pannell said. “But make no mistake. The rebellion is advancing.” The rebel forces’ next targets, he said, include a base said to house some of Syria’s reported chemical weapon stockpile, and the city’s airport. Victory in either fight, it seems, would most likely serve only to lengthen and complicate the fight.

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Michelle Williams 'Really Working' on Growing Out Her Hair

Stylewatch
Style News Now

02/20/2013 at 06:00 PM ET

Lionel Hahn/Abaca; Christopher Peterson/Splash New

Anne Hathaway and Miley Cyrus may be totally committed to their short haircuts, but one famously gamine star is ready to ditch her pixie: Michelle Williams.

“I think I’m ready,” Williams, 32, told E! News at a press junket for her film Oz: The Great and Powerful. “It’s on its way, slowly but surely.”

Don’t expect rapid change from the star, who’s had her signature platinum short cut since debuting the look at Cannes in 2010: “I might want it now, but I’ll have it in three years,” she joked of the slow growing-out time.

In fact, that in-between stage is why she’s waited so long to start the transition. “The mid-stage is insufferable,” she said. “It’s really hard on your self-esteem.”

We have to say, she’s managing it quite nicely, showing off a punky asymmetrical look Wednesday outside Late Night With David Letterman. And since her moviemaking schedule is clear for a bit, she joked that she’s ready to devote herself to the new length. “I’m really happy to not have anything looming — except my hair,” she told E! “I’m really working on growing my hair out!”

Tell us: Are you looking forward to seeing Williams with longer hair (here’s a refresher pic) or do you prefer her pixie?

–Alex Apatoff

PHOTOS: VOTE ON MORE CELEB HAIR MAKEOVERS HERE!

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Adults get 11 percent of calories from fast food

ATLANTA (AP) — On an average day, U.S. adults get roughly 11 percent of their calories from fast food, a government study shows.

That's down slightly from the 13 percent reported the last time the government tried to pin down how much of the American diet is coming from fast food. Eating fast food too frequently has been seen as a driver of America's obesity problem.

For the research, about 11,000 adults were asked extensive questions about what they ate and drank over the previous 24 hours to come up with the results.

Among the findings:

— Young adults eat more fast food than their elders; 15 percent of calories for ages 20 to 39 and dropping to 6 percent for those 60 and older.

— Blacks get more of their calories from fast-food, 15 percent compared to 11 percent for whites and Hispanics.

— Young black adults got a whopping 21 percent from the likes of Wendy's, Taco Bell and KFC.

The figures are averages. Included in the calculations are some people who almost never eat fast food, as well as others who eat a lot of it.

The survey covers the years 2007 through 2010 and was released Thursday by the Centers for Disease Control and Prevention. The authors couldn't explain why the proportion of calories from fast food dropped from the 13 percent found in a survey for 2003 through 2006.

One nutrition professor cast doubts on the latest results, saying 11 percent seemed implausibly low. New York University's Marion Nestle said it wouldn't be surprising if some people under-reported their hamburgers, fries and milkshakes since eating too much fast food is increasingly seen as something of a no-no.

"If I were a fast-food company, I'd say 'See, we have nothing to do with obesity! Americans are getting 90 percent of their calories somewhere else!'" she said.

The study didn't include the total number of fast-food calories, just the percentage. Previous government research suggests that the average U.S. adult each day consumes about 270 calories of fast food — the equivalent of a small McDonald's hamburger and a few fries.

The new CDC study found that obese people get about 13 percent of daily calories from fast food, compared with less than 10 percent for skinny and normal-weight people.

There was no difference seen by household income, except for young adults. The poorest — those with an annual household income of less than $30,000 — got 17 percent of their calories from fast food, while the figure was under 14 percent for the most affluent 20- and 30-somethings with a household income of more than $50,000.

That's not surprising since there are disproportionately higher numbers of fast-food restaurants in low-income neighborhoods, Nestle said.

Fast food is accessible and "it's cheap," she said.

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Wall Street opens lower after jobless data

TORONTO, Feb 20 (Reuters) - Canada's Rebecca Marino, a rising star in women's tennis, stepped away from the sport in search of a normal life on Wednesday, weary of battling depression and cyber-bullies. Ranked number 38 in the world two years ago, the 22-year-old admitted she had long suffered from depression and was no longer willing to make the sacrifices necessary to reach the top. "After thinking long and hard, I do not have the passion or enjoyment to drive myself to the level I would like to be at in professional tennis," Marino explained in a conference call. ...

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The Lede: North Korean Video Shows Obama in Flames

North Korea has released a new propaganda video that shows President Obama and United States troops in flames and credits Washington with leading the impoverished country to become a proud nuclear power.

Songs, operas and novels that stoke hatred against the United States and belittle South Korea are daily fare for North Koreans living under a leadership that uses propaganda as a critical tool of governing. In the last several years, the country has taken its campaign to the Internet, posting thousands of videos onto YouTube that provide outsiders with rare glimpses into the world of North Korean propaganda.

More recently, the country’s propagandists have been busy trumpeting the successful launch of a satellite in December and a Feb. 12 nuclear test, telling North Koreans that their country was becoming a high-tech nuclear power under its young leader, Kim Jong-un.

“Thanks to the Americans,” the latest work by the propagandists, is a 90-second video that was uploaded on YouTube by the North’s official Uriminzokkiri Web site on Sunday.

“It is not incorrect to say that the United States’ gangster-like policy of hostility prompted us to become a most strong military power,” says the text that scrolls across the screen. “Thus it can be said that it was ‘thanks to’ the Americans that we conducted a nuclear test.”

In the video, flames are superimposed on footage of Mr. Obama in Congress, American troops and screen shots of a South Korean television station reporting the North’s nuclear test. It ends with an animated simulation of a nuclear device exploding in an underground test site.

The scorching of the United States in “nuclear flames” or a “nuclear holocaust” is a recurring theme in North Korean statements. A ubiquitous propaganda poster in North Korean towns calls for a “score-settling war” against the Americans.

While North Korea has faced chronic food shortages and growing trade sanctions, its propaganda strives to inspire nationalistic pride among its people, portraying their country as a small nation prospering despite the constant bullying of the “imperialist” Americans.

Part of another video, posted on YouTube by the country’s Korean Central Television on Feb. 12, showed a boy wearing a red scarf singing a song against the backdrop of rockets flying into space and satellites circling the Earth.

“We will fill the space with satellites,” the boy sang. “We will grow to be conquerors of the space.”

Another video posted early this month showed a North Korean man dreaming about circling Earth on a homemade spacecraft and looking down to see the Korean Peninsula unified and Manhattan being attacked by missiles and going up in smoke.

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