Wall Street Week Ahead: Attention turns to financial earnings

NEW YORK (Reuters) - After over a month of watching Capitol Hill and Pennsylvania Avenue, Wall Street can get back to what it knows best: Wall Street.

The first full week of earnings season is dominated by the financial sector - big investment banks and commercial banks - just as retail investors, free from the "fiscal cliff" worries, have started to get back into the markets.

Equities have risen in the new year, rallying after the initial resolution of the fiscal cliff in Washington on January 2. The S&P 500 on Friday closed its second straight week of gains, leaving it just fractionally off a five-year closing high hit on Thursday.

An array of financial companies - including Goldman Sachs and JPMorgan Chase - will report on Wednesday. Bank of America and Citigroup will join on Thursday.

"The banks have a read on the economy, on the health of consumers, on the health of demand," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

"What we're looking for is demand. Demand from small business owners, from consumers."

EARNINGS AND ECONOMIC EXPECTATIONS

Investors were greeted with a slightly better-than-anticipated first week of earnings, but expectations were low and just a few companies reported results.

Fourth quarter earnings and revenues for S&P 500 companies are both expected to have grown by 1.9 percent in the past quarter, according to Thomson Reuters I/B/E/S.

Few large corporations have reported, with Wells Fargo the first bank out of the gate on Friday, posting a record profit. The bank, however, made fewer mortgage loans than in the third quarter and its shares were down 0.8 percent for the day.

The KBW bank index <.bkx>, a gauge of U.S. bank stocks, is up about 30 percent from a low hit in June, rising in six of the last eight months, including January.

Investors will continue to watch earnings on Friday, as General Electric will round out the week after Intel's report on Thursday.

HOUSING, INDUSTRIAL DATA ON TAP

Next week will also feature the release of a wide range of economic data.

Tuesday will see the release of retail sales numbers and the Empire State manufacturing index, followed by CPI data on Wednesday.

Investors and analysts will also focus on the housing starts numbers and the Philadelphia Federal Reserve factory activity index on Thursday. The Thomson Reuters/University of Michigan consumer sentiment numbers are due on Friday.

Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis, said he expected to see housing numbers continue to climb.

"They won't be that surprising if they're good, they'll be rather eye-catching if they're not good," he said. "The underlying drive of the markets, I think, is economic data. That's been the catalyst."

POLITICAL ANXIETY

Worries about the protracted fiscal cliff negotiations drove the markets in the weeks before the ultimate January 2 resolution, but fear of the debt ceiling fight has yet to command investors' attention to the same extent.

The agreement was likely part of the reason for a rebound in flows to stocks. U.S.-based stock mutual funds gained $7.53 billion after the cliff resolution in the week ending January 9, the most in a week since May 2001, according to Thomson Reuters' Lipper.

Markets are unlikely to move on debt ceiling news unless prominent lawmakers signal that they are taking a surprising position in the debate.

The deal in Washington to avert the cliff set up another debt battle, which will play out in coming months alongside spending debates. But this alarm has been sounded before.

"The market will turn the corner on it when the debate heats up," Prudential Financial's Krosby said.

The CBOE Volatility index <.vix> a gauge of traders' anxiety, is off more than 25 percent so far this month and it recently hit its lowest since June 2007, before the recession began.

"The market doesn't react to the same news twice. It will have to be more brutal than the fiscal cliff," Krosby said. "The market has been conditioned that, at the end, they come up with an agreement."

(Reporting by Gabriel Debenedetti; editing by Rodrigo Campos)

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India Ink: Insurgents in Jharkhand Plant Bombs Inside Dead Bodies

Maoist insurgents in Jharkhand state have started to hide explosive devices in the bodies of their enemies, police officials said, a new tactic in the long battle between Indian security forces and the insurgents.

On Monday, rebels killed nine Central Reserve Police Force paramilitary soldiers and three villagers in an ambush in the Karmatiya forest area of Latehar district, about 150 kilometers (90 miles) southwest from the state capital of Ranchi, said state police chief Gauri Shankar Rath. After the insurgents retreated into the woods, the Central Reserve Police Force on Wednesday found the body of Babulal Patel, 29, a constable, with stitches in his abdomen, he said.

His body was flown to Ranchi by helicopter and taken to the Rajendra Institute of Medical Sciences for an autopsy. When the doctors saw the stitches, they grew alarmed and called the top security officials, Binay Kumar, a doctor there, said.

Using X-rays, members of a bomb disposal squad detected an improvised explosive device, or I.E.D., in the soldier’s stomach. With the help of doctors, it took over two hours for the bomb disposal unit to remove the explosive and defuse it outside.

“The I.E.D. connected with detonator batteries and a small solar panel weighing about 2.45 kilograms was extracted with utmost care from the body of the security personnel,” said Dr. Kumar. “Even a small mistake or a little pressure could have exploded the bomb device, triggering a major casualty inside the hospital,” he said. “The abdomen was stitched with surgical precision.”

A similar I.E.D. had detonated when the security personnel, along with some villagers, had removed the body of another colleague in the forest area. Three villagers were killed in that explosion on Wednesday.

Jharkhand’s police chief, Mr. Rath, said this was the first time the Maoist had used bodies as booby traps.

“With this inhuman act, the Maoists have now made it clear that they do not have any regard for human dignity, values and human lives,” said Mr. Rath. “This incident has crossed all limits of cruelty. We’ll definitely retaliate when the time comes.”

Mr. Rath called the Maoists’ most recent attack on security personnel “well planned.”

The state police official said the Maoists had ambushed the security forces under the leadership of Deo Kumar Singh, also known as Arvindji, considered among the top 10 Maoists commanders in Jharkhand and Bihar. “He has executed several deadly operations in the past,” Mr. Rath said.

Latehar’s superintendent of police, Kranti K. Garhdeshi, said that Mr. Singh also was an expert in I.E.D.’s and landmines.

In the past decade, hundreds of security personnel and civilians have been killed in battles with the Maoist insurgents in Jharkhand. The Indian prime minister, Manmohan Singh, has declared the insurgents the biggest internal security threat in India.

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BlackBerry Z10 shown off in leaked marketing materials

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Alicia Keys, Brad Paisley, Katy Perry & More Set for Kids' Inaugural Concert

By Andrea Billups

01/11/2013 at 10:30 AM EST

Alicia Keys, Brad Paisley and Katy Perry

Jeff Kravitz/FilmMagi; Gatty; Splash News Online

Talk about a lot of talent in one place!

The Presidential Inaugural Committee announced Friday that Usher, John Legend, Stevie Wonder, Alicia Keys, Brad Paisley and Katy Perry will be performing for the Kids' Inaugural Concert, set for Jan. 19 in Washington, D.C., in advance of President Barack Obama's being sworn in for a second term.

The kids' concert continues a tradition started by First Lady Michelle Obama and Vice President Joe Biden's wife, Dr. Jill Biden, four years ago during the President's first inaugural celebration.

Events will also feature Nick Cannon, fun., Marc Anthony, Smokey Robinson and members of the Glee cast, among others yet to be announced.

Already announced was that Beyonc é, James Taylor and Kelly Clarkson will perform at the inauguration ceremony Jan. 21 on the West Front of the U.S. Capitol.

Beyoncé makes a return trip to star in Obama's inaugural festivities after serenading the President and First Lady during their first dance at the Neighborhood Ball in 2009 with the Etta James classic "At Last."

This time around, the PIC is hosting two official balls: the Commander-in-Chief’s Ball for members of the U.S. military, and the Inaugural Ball, which brings members of the public together with local leaders.
 
 

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Lung cancer scans backed for older, heavy smokers

The American Cancer Society says there now is enough evidence to recommend screening certain older, heavy smokers for lung cancer.

The society is releasing new guidelines Friday for annual CT lung scans. But they are only recommended for people ages 55 to 74 who have smoked a pack of cigarettes a day for 30 years or the equivalent, such as two packs a day for 15 years. Research shows that screening these people can cut the risk of dying of lung cancer by 20 percent.

Whether screening would help others is not known, so scans are not recommended for them.

Before patients decide whether to be screened, the guidelines say they should have a frank talk about risks and benefits with their doctors.

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Wall Street dips on Wells Fargo, Boeing; S&P up on week

NEW YORK (Reuters) - Stocks dipped on Friday after a record profit at Wells Fargo failed to attract buyers and Boeing shares were pressured by two further problems with its new Dreamliner aircraft.

The benchmark S&P 500 index fell slightly but was still up on the week and just a few points shy of a five-year high set Thursday.

Wells Fargo , the first major U.S. bank to post earnings this season, reported a record fourth-quarter profit as it set aside less money to cover bad loans and made more fees from mortgages. Its shares fell 2 percent to $34.70, erasing Thursday's gains but up 1.6 percent on the month.

Shares of Dow component Boeing fell 2 percent to $75.49 after a cracked cockpit window and an oil leak on separate flights in Japan added to other mishaps earlier in the week and to safety concerns about its new 787 Dreamliner. The US Department of Transportation said the jet would be subject to a review of its critical systems by regulators.

"The market is giving up a little of its rise yesterday," said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois.

He said declines in Wells Fargo and Boeing were pressuring the overall market, but the consolidation around current levels showed the market remained resilient.

The Dow Jones industrial average <.dji> fell 21.54 points or 0.16 percent, to 13,449.68, the S&P 500 <.spx> lost 3.54 points, or 0.24 percent, to 1,468.58 and the Nasdaq Composite <.ixic> dropped 4.23 points, or 0.14 percent, to 3,117.53.

Best Buy shares rallied after its results showed a bit of a turnaround in its U.S. stores, though same-store sales were flat during the key holiday season. Shares were last up 12.2 percent at $13.70.

Basic materials shares were pressured after China's annual consumer inflation rate picked up to a seven-month high, narrowing the scope for the central bank to boost the economy by easing monetary policy. The S&P basic materials sector <.gspm> fell 0.7 percent.

Dendreon Corp shares jumped 18.2 percent to $6.03 after Sanford C. Bernstein upgraded the stock to "outperform" from "market-perform" and said the drugmaker could be one of the best performers in 2013.

U.S.-traded shares of India's No.2 software services provider Infosys Ltd jumped 18.3 percent to $51.98 after the company raised its revenue forecast.

(Editing by Bernadette Baum)

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Way of the World: Economists, Consensus and Healthy Debates

SAN DIEGO — This is a tough time for experts. Empowered by the Internet and embittered by the sour economy, many people doubt the wisdom of expert elites. Journalism sometimes casts further doubt by seeking polarized positions that can draw an attention-grabbing debate, or by taking refuge in he-said-she-said accounts to avoid the harder job of figuring out who’s right.

Now one tribe of specialists — economists — is striking back. Concerned that the great unwashed have come to see all economic proposals as being equally valid, the University of Chicago Booth School of Business has led an effort to figure out what economists agree on, where they diverge and how certain they are about their views.

To do that, the Booth school called on reputable economists to join its panel of experts. Each week, the panelists are asked whether they agree or disagree with a particular economic idea.

“Among practicing economists, it is understood that the media and the political process paints economists as more divided than they are,” Anil K. Kashyap, a professor of economics and finance at the University of Chicago and a leader of the project, explained. “It is more sensational and maybe makes for better reading to have point-counterpoint. It seemed reasonable to provide some context. There’s a lot more settled issues than most people have a sense of.”

Dr. Kashyap cited as an example the gold standard, the monetary system in which the standard economic unit of account is a fixed weight of gold. “The gold standard is an insane idea,” he said. “I don’t know of any reputable economist who thinks it is a wise idea, but it got a lot of real political traction.”

Of the Booth panelists, 93 percent disagreed that the gold standard could improve price stability or employment.

But that is an extreme example. A paper presented this week at the annual gathering of the American Economic Association investigated the survey results in greater detail. “Based on our analysis, we conclude that there is close to full consensus among these panel members when the past economic literature on the question is large,” the authors of the paper, Roger Gordon and Gordon B. Dahl of the University of California, San Diego, wrote. “When past evidence is less extensive, differences in opinions do show up.”

But the authors did not find an ideological bias in those disagreements: “There are certainly some idiosyncratic views expressed, but we found no evidence of different camps.”

Economists, these results suggest, seek to objectively establish the truth and have a widely agreed on body of knowledge about how the economy works. In an age when it can be hard to write the word “facts” without reflexively reaching for quotation marks, that is of some comfort. But this picture of consensus among experts comes with a few caveats.

One was articulated by Paul Krugman, a Nobel Prize laureate and New York Times columnist who was at the American Economic Association meeting. Mr. Krugman accepted the idea that economists share a wide body of agreed, objective and nonideological knowledge. But he argued that when it comes to one subset of issues — business-cycle macroeconomics, or how policy should respond to booms and busts — economists are both divided and biased. That matters, Mr. Krugman rightly pointed out, because outside the academy these are among the economic issues ordinary mortals care about, and fight about, the most.

The second caveat is that consensus may be more fleeting, and therefore less valuable, than the economic high priesthood might like to think. To his credit, Dr. Kashyap revealed two issues on which the economic conventional wisdom, and his own views, have changed since the financial crisis of 2008.

One is currency controls: “Having watched all this hot money flow into these markets, I am much more sympathetic to the desire to slow things down,” he said.

The second is whether central bankers should try to pop asset bubbles, an idea toward which Dr. Kashyap has softened. “I don’t think the conventional wisdom was very good on this and I was firmly in the consensus,” he said.

These shifts suggest that it is worth looking more closely at one clear subgroup among the economists in the University of California study. Dr. Gordon and Dr. Dahl searched for, and failed to detect, ideological bias or even the subtler influence of the very distinct intellectual traditions of top U.S. universities.

But they did pick up a clear difference between men and women. “Women,” they write, “tend to be more cautious in taking a stance.” For women making their way in the 21st-century world of work, that reticence is mostly a handicap — a willingness to admit to uncertainty is one reason women are paid less and can find it difficult to break through the glass ceiling.

For the benefit of the community as a whole, though, more female economists may be needed. The quest for objective economic knowledge is surely a good thing, as is the Booth effort to map what economists agree on and where they diverge. But given how profoundly and unexpectedly the world economy collapsed in 2008, maybe a little more womanly humility about that conventional wisdom would be a good thing, too.

Chrystia Freeland is editor of Thomson Reuters Digital.

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Amazon steps up digital music competition with Apple

SAN FRANCISCO (Reuters) – Amazon.com Inc unveiled a service that increases competition with Apple Inc’s dominant iTunes store.

Amazon launched Amazon AutoRip, which gives customers free digital versions of music CDs they purchase from the world’s largest Internet retailer.

The digital music files are automatically stored in customer libraries in remote datacenters run by Amazon, where they are available to play or download immediately through the company’s Cloud Player service, the company said.

Amazon customers who have bought AutoRip-eligible CDs at any time since the company started selling discs in 1998 will also get digital versions of that music stored in their Cloud Player libraries for free, the company added.

More than 50,000 albums are available for AutoRip and Steve Boom, head of digital music at Amazon, said the company focused on music that has been the most popular among its customers during the past 15 years.

Albums include “21″ by Adele; “Overexposed” by Maroon 5; “Dark Side of the Moon” by Pink Floyd and “Thriller” by Michael Jackson.

Boom declined to estimate how many CDs Amazon expects to digitize through the new service. However, he noted that the company has sold hundreds of millions of CDs to millions of customers.

“When we picked those 50,000 titles we focused on having a substantial majority of our physical CD sales covered,” he added.

Amazon is hoping the new service boosts digital music sales and encourages more people to use its cloud music service.

“People will be exposed to Cloud Player and our digital music offering, which is a good thing,” Boom said. “We want to take this global.”

Amazon’s MP3 digital music business has been around since 2007, but its market share is less than 15 percent, according to The NPD Group. Apple’s iTunes store is the clear leader, with over 50 percent of the market.

Amazon is making a bigger push against iTunes now that the company’s Kindle Fire tablets are in more consumers’ hands and its Cloud Player music application is available on a range of other mobile devices, including Apple’s iPhone, iPad and iPod Touch.

(Reporting By Alistair Barr; editing by Andrew Hay)

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George Clooney Kicks Off a Tequila-Fueled Road Trip

Caught in the Act

01/10/2013 at 10:40 AM EST

George Clooney (left) and Rande Gerber

Seth Browarnik/Startraks

Tequila trip!

As part of the launch of his new spirit brand, Casamigos Tequila, George Clooney stepped out on Tuesday night to celebrate its launch at Rocco's Tacos in Ft. Lauderdale, Fla.

The Descendants actor was there with his fellow founders Rande Gerber and Mike Meldman to sample cocktails and mingle with locals.

"George and Rande did not separate the entire night. They both drank the Casamigos specialty cocktails being served," an onlooker tells PEOPLE.

The "really friendly" Clooney also took time to take pictures with "almost every attendee at the event," the source says.

"There was one woman taking photos with her iPad and George was helping her get the best shots – he kept calling her 'the iPad lady'!" the source adds.

The promotional tequila tour – which is expected to bring the actor to L.A., Las Vegas and Dallas – kicked off with a short film starring Clooney, Gerber, Cindy Crawford and Stacy Keibler. In the minute long film, the group of friends play musical beds after a night out of drinking Casamigos.

– Jennifer Garcia

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Retooling Pap test to spot more kinds of cancer

WASHINGTON (AP) — For years, doctors have lamented that there's no Pap test for deadly ovarian cancer. Wednesday, scientists reported encouraging signs that one day, there might be.

Researchers are trying to retool the Pap, a test for cervical cancer that millions of women get, so that it could spot early signs of other gynecologic cancers, too.

How? It turns out that cells can flake off of tumors in the ovaries or the lining of the uterus, and float down to rest in the cervix, where Pap tests are performed. These cells are too rare to recognize under the microscope. But researchers from Johns Hopkins University used some sophisticated DNA testing on the Pap samples to uncover the evidence — gene mutations that show cancer is present.

In a pilot study, they analyzed Pap smears from 46 women who already were diagnosed with either ovarian or endometrial cancer. The new technique found all the endometrial cancers and 41 percent of the ovarian tumors, the team reported Wednesday in the journal Science Translational Medicine.

This is very early-stage research, and women shouldn't expect any change in their routine Paps. It will take years of additional testing to prove if the so-called PapGene technique really could work as a screening tool, used to spot cancer in women who thought they were healthy.

"Now the hard work begins," said Hopkins oncologist Dr. Luis Diaz, whose team is collecting hundreds of additional Pap samples for more study and is exploring ways to enhance the detection of ovarian cancer.

But if it ultimately pans out, "the neat part about this is, the patient won't feel anything different," and the Pap wouldn't be performed differently, Diaz added. The extra work would come in a lab.

The gene-based technique marks a new approach toward cancer screening, and specialists are watching closely.

"This is very encouraging, and it shows great potential," said American Cancer Society genetics expert Michael Melner.

"We are a long way from being able to see any impact on our patients," cautioned Dr. Shannon Westin of the University of Texas MD Anderson Cancer Center. She reviewed the research in an accompanying editorial, and said the ovarian cancer detection would need improvement if the test is to work.

But she noted that ovarian cancer has poor survival rates because it's rarely caught early. "If this screening test could identify ovarian cancer at an early stage, there would be a profound impact on patient outcomes and mortality," Westin said.

More than 22,000 U.S. women are diagnosed with ovarian cancer each year, and more than 15,000 die. Symptoms such as pain and bloating seldom are obvious until the cancer is more advanced, and numerous attempts at screening tests have failed.

Endometrial cancer affects about 47,000 women a year, and kills about 8,000. There is no screening test for it either, but most women are diagnosed early because of postmenopausal bleeding.

The Hopkins research piggybacks on one of the most successful cancer screening tools, the Pap, and a newer technology used along with it. With a standard Pap, a little brush scrapes off cells from the cervix, which are stored in a vial to examine for signs of cervical cancer. Today, many women's Paps undergo an additional DNA-based test to see if they harbor the HPV virus, which can spur cervical cancer.

So the Hopkins team, funded largely by cancer advocacy groups, decided to look for DNA evidence of other gynecologic tumors. It developed a method to rapidly screen the Pap samples for those mutations using standard genetics equipment that Diaz said wouldn't add much to the cost of a Pap-plus-HPV test. He said the technique could detect both early-stage and more advanced tumors. Importantly, tests of Paps from 14 healthy women turned up no false alarms.

The endometrial cancers may have been easier to find because cells from those tumors don't have as far to travel as ovarian cancer cells, Diaz said. Researchers will study whether inserting the Pap brush deeper, testing during different times of the menstrual cycle, or other factors might improve detection of ovarian cancer.

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