Wall St clings to hopes for budget deal, but market risks rising

NEW YORK (Reuters) - If the United States sails over the fiscal cliff in less than two weeks, it probably will not mean disaster for the stock market, investors said on Friday, but the margin for error is getting dangerously thin. At heart are fears over how long the U.S. economy, the world's largest, can hold up under the brunt of higher taxes and big spending cuts that would be triggered by the fiscal cliff. If Washington's inability to reach a deficit-reduction deal persists into late January or provokes a second credit ratings agency to strip the United States of its top triple-A rating, all bets may be off. "Clearly, if this thing drags on with no deal, eventually markets are going to start to take it on the chin," said Sandy Lincoln, chief market strategist at BMO Asset Management in Chicago, which oversees $38 billion. Stock markets fell on Friday after a Republican proposal that would have prevented tax increases on all but those earning more than $1 million unraveled amid a conservative backlash. Though President Barack Obama had vowed to veto the bill, opposition from Republicans stoked doubt about the ability of House of Representatives Speaker John Boehner to win support within his party. That suggested the two sides were too far apart to reach a deal to forestall the $600 billion in automatic tax hikes and spending cuts before they are set to begin to take effect in January. "The fact they couldn't even get the Republicans in Congress to sign on for that is disturbing. If we get into late January, early February and we are still in the soup, then the odds of going into a recession go up, and I just can't believe anybody wants that," said Jeffrey Saut, chief investment strategist at Raymond Jones Financial. HEATING UP If the new year dawns without a deal, Jack Ablin, chief investment officer at BMO Private Bank, said he would view "any incremental market sell-off as a buying opportunity." But if things remain in limbo in February, "that is going to leave a mark on the economy," he said. "The way I'd characterize it is that we're sitting in this pot of water and on January 1, Congress turns on the flame underneath. It's comfortable at first, but eventually it's going to start to hurt." Americans would start to feel the effects in their wallets. As of 2013, payroll taxes would revert to 6.2 percent of Americans' paychecks, up from the 4.2 percent level put in place during the economic downturn. Higher income tax rates would also start to hit, though that could be delayed by officials in Washington. Still, Americans would start to feel a pinch on their paychecks, which could hurt spending next year. Some investors believe holiday sales are already being affected. Another risk, said BNY Mellon currency strategist Michael Woolfolk, would be if a second ratings agency cuts the United States' AAA rating, a move that Standard & Poor's made after a similar budget standoff in 2011. Fitch Ratings said this week it would be more likely to downgrade the United States if the economy goes over the cliff. "Markets would take that very badly," Woolfolk said. "Stocks sold off by 10 percent after the S&P downgrade in 2011, and I'd expect something at least as severe" if Fitch were to act. LAST-MINUTE DEAL STILL POSSIBLE Of course, lawmakers still have 10 days left in 2012 to strike a deal, and some are confident they will return to Capitol Hill after Christmas and do just that. "So far, the market has been handling setbacks in talks very well, and with a bit of time left on the clock, this time will be no different," said Jim Barnes, senior fixed income manager at National Penn Investors Trust Co. For some, the political disarray among Congressional Republicans that sent Boehner's "Plan B" to defeat late on Thursday only increased those hopes. "Given that Reid called Plan B 'dead on arrival' and Obama said he would veto it, the non-passage of this bill due to lack of Republican support makes it more likely, not less likely, that compromise will be reached," said Jeffrey Gundlach, chief executive officer and chief investment officer of DoubleLine Capital, which oversees more than $50 billion. Harry Reid is the Democratic Senate leader. The "continued positioning and posturing" isn't a huge concern to investors, Woolfolk said. "Neither side has incentive to compromise too much, too soon. They can extract concessions by delaying. So I would not be surprised if it takes until minutes before midnight on December 31." All the back-and-forth, however, may keep the stock market a bit more volatile than it would normally be so late in the year. The benchmark S&P 500 <.spx> has gained or lost more than 1 percent in three of the past five trading sessions, while the CBOE Volatility Index <.vix> has climbed more than 20 percent over the past three days. In a sign of the type of volatility investors may be confronted with, S&P 500 E-Mini futures fell as much as 3.6 percent in after-hours trading Thursday evening, with a 15-point drop in less than one second that resulted in a brief halt in futures trading. "While last night's mini-crash is a rare event, I do expect bigger moves than we've seen in the past year," said Enis Taner, global macro editor at RiskReversal.com, an options trading firm based in New York.
Read More..

Signs suggest better economy if 'cliff' is averted

WASHINGTON (AP) — Fresh signs of a strengthening U.S. economy on Friday suggested that if Congress and the White House can avert the "fiscal cliff," the economic recovery might finally accelerate in 2013. Consumers spent and earned more in November. And for a second straight month, U.S. companies increased their orders for a category of manufactured goods that reflects investment plans. In light of the latest figures, some analysts said the economy could end up growing faster in the current October-December quarter — and next year — than they previously thought. "I see momentum building," said Joel Naroff, chief economist at Naroff Economic Advisors. "If Washington makes the moves it needs to make, then the economy should pick up speed next year." That's a big "if." House Republicans called off a vote on tax rates and left budget talks in disarray 10 days before the package of tax increases and spending cuts known as the fiscal cliff would take effect. Still, helping lift the optimism of some analysts was a government report that consumer spending, which fuels about 70 percent of the economy, rose 0.4 percent in November compared with October. Spending had dipped 0.1 percent in October. But that decline was linked in part to disruptions from Superstorm Sandy. Incomes rose 0.6 percent in November, the biggest gain in 11 months. It reflected a rebound in wages and salaries, which had been depressed in October. Damage from Sandy in the Northeast prevented some people from working at the end of October and reduced wages at an annual rate of $18 billion. A separate report Friday showed that a category of durable-goods orders that tracks business investment surged 2.7 percent. That gain followed an upwardly revised 3.2 percent jump in October, the biggest in 10 months. The back-to-back increases followed a period of weakness in so-called core capital goods that had raised concerns about business investment, a driving force in the economy. The economy grew in the July-September quarter at a solid 3.1 percent annual rate. But some analysts said they thought growth would slow significantly in the October-December period. They predicted that consumers and businesses would cut back on spending because of worries about the fiscal cliff. But after Friday's reports, Peter Newland, an economist at Barclays Capital, said Barclays is raising its estimate of growth in the current quarter to a 2.4 percent annual rate, from a previous estimate of 2.2 percent. Naroff said he thinks growth in the fourth quarter can reach a 2.6 percent annual rate. He said he expects growth to hit a rate of around 3.2 percent in the January-March quarter and 3.6 percent in the April-June quarter. He said those estimates are based on his confidence that Washington policymakers will avert the sharp tax increases and spending cuts, which could trigger a recession if they remain in place for much of 2013. Naroff said U.S. economic growth would benefit next year from a rebounding housing market, gradual hiring gains that will boost incomes and the likelihood that Europe's financial crisis will ease and dampen U.S. exports less than in 2012. But he said his optimistic forecasts would be derailed if the economy goes off the fiscal cliff in January, which could send shockwaves through financial markets. "If the fiscal cliff is breached, the biggest concern is confidence," Naroff said. "I remain hopeful that saner heads will prevail in Washington." Economists said the budget impasse and the uncertainty it's created about tax rates are reducing consumer confidence. The University of Michigan said Friday that its index of consumer sentiment for December fell to 72.9, its lowest point since July. It was a sharp drop from the November reading of 82.7, a five-year high. Chris G. Christopher Jr., senior economist at IHS Global Insight, said he still expected holiday retail sales to increase a respectable 3.9 percent this year over last year despite slumping consumer confidence. And he said spending momentum should continue into 2013 — as long as the fiscal cliff is resolved in a way that avoids damaging the economy. "We are assuming that the fiscal cliff does get resolved, and if it does, we should see strong consumer spending and momentum for the economy in 2013," Christopher said. "But if we go down the fiscal cliff, then the first quarter will not be pretty."
Read More..

Scenarios: Seven ways the US 'fiscal cliff' crisis could end

WASHINGTON (Reuters) - So what now? The U.S. House of Representatives' rejection of a bill to raise taxes on just 0.18 percent of Americans - those making more than $1 million a year - has raised questions about the Republican-led chamber's ability to approve any plan to avert the looming "fiscal cliff." Unless President Barack Obama and the U.S. Congress can forge a deal during the Christmas and New Year's holiday season, the largest economy in the world could be thrust back into a recession because of the steep tax increases and spending cuts that are due to begin in January. The threat of across-the-board government spending cuts and tax increases - about $600 billion worth - was intended to shock the Democratic-led White House and Senate and the Republican-led House into moving past their many differences to approve a plan that would bring tax relief to most Americans and curb runaway federal spending. For weeks, Obama and House Speaker John Boehner, the top Republican in Congress, have struggled to find a compromise. But after a glimmer of hope that a deal was close early this week, Boehner - apparently under pressure from anti-tax House Republicans aligned with the conservative Tea Party movement - pressed the "pause" button on negotiations. He then tried to push a backup plan through the House late on Thursday, only to see his fellow Republicans kill it. Where do Obama and Congress go from here? Here are some possible scenarios. * Obama and Boehner go back into their secret negotiations. Before Boehner started touting his failed "Plan B" to boost taxes on those who make more than $1 million, he and Obama were moving closer together on a plan to raise taxes on certain high-income Americans and cut spending. They could pick up where they left off and quickly cut a deal to bridge the gap. But a compromise with possibly $1 trillion in new taxes and $1 trillion in new, long-term spending cuts could be a tough sell for both Republicans and Democrats in Congress. Boehner would have to persuade enough Republicans on the idea of tax increases. Obama, meanwhile, would have to get Democrats in Congress to back cuts to some social safety net programs such as Social Security pensions and Medicare and Medicaid health insurance for the elderly and poor. House Republicans appear to be the tougher sell. * A huge drop in the stock market sends a loud message to Washington politicians to stop arguing and cut a quick but meaningful deal. That is what happened in late September 2008, after Congress rejected a massive financial bailout package despite warnings by Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson of an economic collapse if the bill failed. The Dow Jones Industrial Average plunged more than 700 points and Congress quickly reversed course, approving the $700 billion Troubled Asset Relief Program just days later. The "fiscal cliff" may not be as dramatic a situation, but the tax increases and cuts in federal spending could deal a stiff blow to the economy. * No deal happens in the dwindling days of 2012 and the U.S. government jumps off the fiscal cliff - at least temporarily. On January 1, income taxes would go up on just about everyone. During the first week of January, Congress could scramble and get a quick deal on taxes and the $109 billion in automatic spending cuts that most lawmakers want to avoid. Why could they reach a deal in January if they fail in December? The reason would be that once taxes go up, it would be easier to allow a few of those increases to remain in place - mostly on the wealthy - and repeal those that would hit middle- and lower-income taxpayers. Such a scenario would mean that no member of Congress technically would have to vote for a tax increase on anyone - taxes would have risen automatically - and the only votes would be to decrease tax rates for most Americans back to their 2012 levels. * No deal occurs for another six weeks or so. If Congress does not raise the nation's debt limit, by mid-February the Treasury Department likely would exhaust its ability to borrow. That would put the nation at risk of defaulting on its debt. Republicans have withheld their approval of the debt-limit increase as leverage to try to get the kind of "fiscal cliff" solution they want: Fewer increases in spending and taxes, and more cuts to Social Security, Medicare and Medicaid. This is the strategy they employed in mid-2011 during the last fight over the debt limit, which is about $16.4 trillion. Republicans wrung spending cuts out of Democrats in return for new borrowing authority, but paid a political price. Global financial markets were rocked by the long uncertainty brought on by the standoff in Congress, one ratings agency downgraded U.S. credit standing and Republicans saw their public approval ratings sink. * Boehner decides on a gutsy move: Call a House vote on a bill that would raise tax rates for families with net annual incomes above $250,000, exactly what Obama has sought. The plan could pass the House with strong Democratic support and some Republican votes. As soon as it passed, the House likely would leave town for the rest of the year without addressing other Obama priorities such as increasing the government's debt limit. * A partial deal is struck at any point. Congress could pass a plan that would put off most of the income tax increases that are due in January, or extend some other expiring tax breaks - namely one to prevent middle-class taxpayers from being subject to higher tax rates aimed at the wealthy under the alternative minimum tax. * Stock markets do not tank and Washington politicians conclude that the "fiscal cliff" is not such a bad thing.
Read More..

Wall Street Week Ahead: A lump of coal for "Fiscal Cliff-mas"

NEW YORK (Reuters) - Wall Street traders are going to have to pack their tablets and work computers in their holiday luggage after all. A traditionally quiet week could become hellish for traders as politicians in Washington are likely to fall short of an agreement to deal with $600 billion in tax hikes and spending cuts due to kick in early next year. Many economists forecast that this "fiscal cliff" will push the economy into recession. Thursday's debacle in the U.S. House of Representatives, where Speaker John Boehner failed to secure passage of his own bill that was meant to pressure President Obama and Senate Democrats, only added to worry that the protracted budget talks will stretch into 2013. Still, the market remains resilient. Friday's decline on Wall Street, triggered by Boehner's fiasco, was not enough to prevent the S&P 500 from posting its best week in four. "The markets have been sort of taking this in stride," said Sandy Lincoln, chief market strategist at BMO Asset Management U.S. in Chicago, which has about $38 billion in assets under management. "The markets still basically believe that something will be done," he said. If something happens next week, it will come in a short time frame. Markets will be open for a half-day on Christmas Eve, when Congress will not be in session, and will close on Tuesday for Christmas. Wall Street will resume regular stock trading on Wednesday, but volume is expected to be light throughout the rest of the week with scores of market participants away on a holiday break. For the week, the three major U.S. stock indexes posted gains, with the Dow Jones industrial average <.dji> up 0.4 percent, the S&P 500 <.spx> up 1.2 percent and the Nasdaq Composite Index <.ixic> up 1.7 percent. Stocks also have booked solid gains for the year so far, with just five trading sessions left in 2012: The Dow has advanced 8 percent, while the S&P 500 has climbed 13.7 percent and the Nasdaq has jumped 16 percent. IT COULD GET A LITTLE CRAZY Equity volumes are expected to fall sharply next week. Last year, daily volume on each of the last five trading days dropped on average by about 49 percent, compared with the rest of 2011 - to just over 4 billion shares a day exchanging hands on the New York Stock Exchange, the Nasdaq and NYSE MKT in the final five sessions of the year from a 2011 daily average of 7.9 billion. If the trend repeats, low volumes could generate a spike in volatility as traders keep track of any advance in the cliff talks in Washington. "I'm guessing it's going to be a low volume week. There's not a whole lot other than the fiscal cliff that is going to continue to take the headlines," said Joe Bell, senior equity analyst at Schaeffer's Investment Research, in Cincinnati. "A lot of people already have a foot out the door, and with the possibility of some market-moving news, you get the possibility of increased volatility." Economic data would have to be way off the mark to move markets next week. But if the recent trend of better-than-expected economic data holds, stocks will have strong fundamental support that could prevent selling from getting overextended even as the fiscal cliff negotiations grind along. Small and mid-cap stocks have outperformed their larger peers in the last couple of months, indicating a shift in investor sentiment toward the U.S. economy. The S&P MidCap 400 Index <.mid> overcame a technical level by confirming its close above 1,000 for a second week. "We view the outperformance of the mid-caps and the break of that level as a strong sign for the overall market," Schaeffer's Bell said. "Whenever you have flight to risk, it shows investors are beginning to have more of a risk appetite." Evidence of that shift could be a spike in shares in the defense sector, expected to take a hit as defense spending is a key component of the budget talks. The PHLX defense sector index <.dfx> hit a historic high on Thursday, and far outperformed the market on Friday with a dip of just 0.26 percent, while the three major U.S. stock indexes finished the day down about 1 percent. Following a half-day on Wall Street on Monday ahead of the Christmas holiday, Wednesday will bring the S&P/Case-Shiller Home Price Index. It is expected to show a ninth-straight month of gains. U.S. jobless claims on Thursday are seen roughly in line with the previous week's level, with the forecast at 360,000 new filings for unemployment insurance, compared with the previous week's 361,000.
Read More..

U.S. judge approves settlement in BP class action suit

(Reuters) - A U.S. judge on Friday gave final approval to BP Plc's settlement with individuals and businesses who lost money and property in the 2010 Gulf of Mexico oil spill. The order only addressed the settlement of economic and property damage claims, not a separate medical benefits settlement for cleanup workers and others who say the spill made them sick. BP has estimated that it will pay $7.8 billion to settle more than 100,000 claims in the class action litigation. U.S. District Judge Carl Barbier initially approved the deal in May, but held a "fairness hearing" in November to weigh objections from about 13,000 claimants challenging the settlement to resolve some of BP's liability for the worst offshore oil spill in U.S. history. London-based BP's Macondo well spewed 4.9 million barrels of oil into the Gulf of Mexico over a period of 87 days. The torrent fouled shorelines from Texas to Alabama and eclipsed the 1989 Exxon Valdez spill in Alaska in severity. Lawyers for some affected parties had objected to the deal, reached in March between BP and lawyers representing plaintiffs ranging from restaurateurs, hoteliers, and oyster men who lost money from the spill. They argued that some claimants would be underpaid or unfairly excluded. But in a 125-page order approving the settlement, Barbier called the deal "fair, reasonable and adequate," citing the low number of class members who objected or opted out. BP welcomed the approval order in a statement, adding that the settlement resolves the majority of economic and property damage claims stemming from the accident. "Today's decision by the Court is another important step forward for BP in meeting its commitment to economic and environmental restoration efforts in the Gulf and in eliminating legal risk facing the company," BP said. Separate from the class action claims, BP has been locked in a year-long legal battle with the U.S. government and Gulf Coast states to settle billions of dollars in civil and criminal liability from the explosion. In a settlement with the U.S. government announced last month, BP agreed to pay $4.5 billion in penalties and plead guilty to felony misconduct. The government also indicted the two highest-ranking BP supervisors aboard the Deepwater Horizon rig during the disaster, charging them with 23 criminal counts including manslaughter. The class action case is In Re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico on April 20, 2010, U.S. District Court for the Eastern District of Louisiana, No. 10-2179.
Read More..

Canadian Football Hall of Famer Eagle Keys dies at 89; won three Grey Cups

VANCOUVER - Canadian Football Hall of Fame inductee Eagle Keys has died at the age of 89.
Keys played centre and linebacker for five years with the Montreal Alouettes (1949-51) and with the Edmonton Eskimos (1952-54), being named to three CFL all-star teams.
He became a coach after retiring as a player, starting as an assistant in Edmonton in 1955. He became the Eskimos' head coach in 1959, a job he held until 1963.
Keys also was the head coach of the Saskatchewan Roughriders (1965-70) and B.C. Lions (1971-75).
Keys played for two Grey Cup-winning teams and won one with the Roughriders in 1966.
He was inducted into the Canadian Football Hall of Fame as a builder in 1990.
Read More..

Vikings still wowed by Peterson's rapid recovery

EDEN PRAIRIE, Minn. (AP) — Most days, Adrian Peterson went through rehab drills looking as if he were never injured.
No one could've foreseen the rapid recovery Peterson has made since that bionic left knee of his was severely damaged near the end of a lost 2011 season for Minnesota. No one could have predicted these weekly gallops down the field and through the NFL record book.
With two games to go, Peterson needs 294 yards to break Eric Dickerson's all-time single-season rushing record. He is 188 yards from becoming the seventh player in league history to reach 2,000 yards in one year.
___
Dec. 24, 2011:
The Vikings were playing at Washington the day before Christmas, a meaningless matchup between teams well out of postseason contention. The end of a routine 3-yard run early in the third quarter by Peterson, the throwback thoroughbred the Vikings have hitched their franchise to in a league now dominated by the forward pass, ended with excruciating pain.
Redskins safety DeJon Gomes dived at his lower left leg to take him down, tearing Peterson's anterior cruciate and medial collateral ligaments in the process. Peterson, lying face down on the grass, knew immediately "something bad" had happened. By the time head athletic trainer Eric Sugarman and team physician Dr. Joel Boyd raced over from the sideline, Peterson was screaming, "Why me? Why me?"
Sugarman and Boyd performed the Lachman test, where the leg is pushed and wiggled to gauge the stability of the ACL.
"It was just gone," Sugarman said. "So now your worst nightmare is confirmed."
By the time the game was over, Peterson's attitude had already turned. His knee in a brace, sitting in the training room, he asked Sugarman, "Hey, what do we do next? Where do we start? How do we get better?"
"His grieving was very short-lived," Sugarman said.
The rehabilitation of one of the best running backs in NFL history began.
___
The winter:
The first three months of the reconstructive knee surgery recovery are always the hardest, and even for Peterson this was no different. The mornings were dark and cold. Most of his teammates were gone. There were occasional text messages Sugarman had to send to encourage Peterson not to let up. The swelling had to subside first, before he could start the process of restoring his range of motion. The pain from both the incision and the bone that had to be broken to allow the ligament to be replaced was intense. But as soon as Dr. James Andrews performed the procedure in Birmingham, Ala., on Dec. 30, Peterson was ready.
"I had in my mind from the moment I got out of surgery that I was going to be back, that I was going to be good and healthy," Peterson said.
In three weeks, he was walking. After six weeks, he began to jog in the pool. At eight weeks, he was sprinting, with the jets turned on for resistance. Then, 10 weeks after the operation, he ran on hard ground for the first time. Peterson and Sugarman were the only people on the indoor field at Winter Park that day.
"The first time I have a guy run after an ACL, they look like they have marbles in their shoe," Sugarman said. "He probably had done it on his own without telling me before that, I would guess. But the guy took off and ran across the field like, 'Whoa! He looks totally normal.' This isn't supposed to happen. So that was awesome."
___
The spring and summer:
On the first day of the team's conditioning program in late April, the players lined up for sprints. Peterson was working with Sugarman on the side when he saw what was going on. Granted permission to participate, Peterson jumped in line with the rest of the runners. His exhausted teammates wore expressions of disbelief.
"He finished in first four different times," head coach Leslie Frazier said.
Peterson also spent time at his offseason home in Houston, where he worked with physical therapist Russ Paine at the Memorial Herrmann Sports Medicine Institute. Paine picked up where Sugarman and his staff left off.
When Peterson showed up for his sessions at the clinic, the other athletes rehabbing there stared in amazement as he sprinted at the top speed levels of the treadmill. When he lined himself up at the leg press machine, he asked that the prescribed weight be doubled.
"I really wasn't playing around. I was on a mission," he said.
After 14 weeks, the drills advanced. Sugarman rolled a soccer ball as Peterson shuffled from side to side in a sand pit, trying to catch it like a goalie and throw it back in the same motion. He ran tight circles around hula hoops on the turf. He sprinted forward as Sugarman held him back with a bungee cord. Sometimes, for fun, they chased each other around the training room on stools with wheels so Peterson could strengthen his hamstring muscles. Or they'd stand on small red discs and toss a ball back and forth.
"He was terrible at it. He just hates to lose at anything," Sugarman said. "So it's great when I can beat him at something."
Peterson started training camp in Mankato, Minn., on the physically unable to perform list. His protest unsuccessful, he realized the importance of taking the process slowly. Those precious last few degrees of flexion in the knee took several months to return. The cutting, stopping and restarting he has to do for his job required nothing less than the full explosive ability of the joint. The muscles around the knee that atrophied after the surgery needed to be recalibrated, with quadriceps, hamstrings and calves in the proper strength proportion to one another.
Peterson began to be integrated into practice, though, with fans and coaches holding their breaths,
"He just dominated the rehab. It was ridiculous," Sugarman said.
___
The opener:
Peterson was in the backfield on Sept. 9 as he planned all along, and he ran like he never left, carrying the ball 17 times for 84 yards and two touchdowns in an overtime victory over Jacksonville. He got the game ball afterward, which he gratefully passed on to Sugarman.
The ligament was as strong as ever, as good as new, but that didn't mean the Vikings weren't still nervous, wondering how Peterson would perform.
"I don't really worry anymore. But the first part of the season I was worried sick," Sugarman said.
___
The rest of the season:
Peterson felt right after the Sept. 23 win over San Francisco, when he woke up the morning after feeling the usual post-game soreness. He truly began to take off on Oct. 21, when he hit the 150-yard mark in beating Arizona. He's passed the 170-yard mark in four of the last six games, twice surpassing 200 yards.
"He was never going to let this injury be an excuse for him not to be at the level he was at, and I think all the people saying he couldn't do it gave him more drive," defensive end Jared Allen said. "That's the competitor in him, and that's why we love him here."
Peterson jumped in the cold tub to recover after Sunday's game at St. Louis. He's still been doing stretching and strengthening exercises on his left leg. Other than that, there's nary a sign of his injury left.
Sugarman has received all kinds of correspondence from coaches and competitors in all levels of athletics, wondering what their secret was. But Peterson hasn't really rewritten the ACL rehab manual. He's just added another remarkable chapter to his exceptional career.
"His ability to heal is probably different than mine or yours. His work ethic. His determination. His faith. He just has all these factors that, when put together, allowed him to accomplish what he has almost a year out from this terrible injury," Sugarman said.
"I don't think it's quite fair for everyone who tears their ACL moving forward to compare themselves to Adrian Peterson. They're setting themselves up for, in most cases, an unrealistic expectation."
Peterson, who is 27, has stated his desire to break Emmitt Smith's record for career rushing. He'd have to play a long time to do that. But after his performance this year, that mark is just as achievable for him as the rest.
"It just depends on how long God blesses me to play," he said. "I might go far and play 'til I'm 40. I don't know."
Read More..

YEARENDER-NFL-New generation of QBs emerge but league faces threats

MIAMI, Dec 21 (Reuters) - A new generation of talented quarterbacks emerged in 2012 but a refereeing fiasco, worries over concussions and player behavior all left their mark on the National Football League (NFL).
The year was also a tantalizing tale of the Mannings with New York Giants quarterback Eli Manning winning his second Super Bowl title in four years with a win over New England in the same stadium where older brother Peyton played for Indianapolis.
After a year out with serious neck problems, Peyton Manning restarted his career with the Denver Broncos after 14 years with the Colts and quickly cast aside any doubts over his durability by leading his team to a playoff berth and division title.
Manning's revival came at the expense of Tim Tebow, the most talked about player in 2011, who has spent most of this year on the sidelines after being traded to the New York Jets.
'Tebow-mania' reached its peak in January when he led the Broncos to a playoff win over Pittsburgh but a crushing loss to the New England Patriots a week later was the last in a Denver uniform for the unorthodox quarterback.
Tebow's charisma, his noted religiosity and clean-cut good looks made him one of the most popular NFL players in years but that did not stop Jets head coach Rex Ryan leaving him as a bit-player and back-up to Mark Sanchez with most critics agreeing that Tebow's poor passing technique has hampered his career.
Tebow's fans understandably view 2012 as a year in which an exciting player's talent was wasted but in the big picture there has been no shortage of exciting new talent to enjoy in the NFL.
It was hard to imagine anyone exceeding the record-breaking impact made in 2011 by Carolina Panthers rookie quarterback Cam Newton but it did not take long for the top two picks in this year's NFL Draft, Indianapolis's Andrew Luck and Washington's Robert Griffin III respectively, to make an impact.
Luck ushered in the post-Manning era faster than anyone had imagined, with his outstanding passing and classy composure indicating he is a player who could enjoy similar dominance to his predecessor.
Griffin, or RG3 as he is widely known, is a different quarterback altogether - his speed and courage make him a genuine double-threat, able to rush but he is also, as critics of Tebow have noted, an accomplished pocket passer too.
Seattle's Russell Wilson and Miami's Ryan Tannehill have also made good impressions in their rookie years and with Tom Brady, Drew Brees, Aaron Rodgers, Ben Roethlisberger and the Mannings still on top of their game, it has become an era of unprecedented passing yards for quarterbacks.
NASTY UNDERBELLY
Given the key role quarterbacks play, the abundance of talent at the position should mark a golden-era for America's most popular league but the game has a nasty underbelly which has been revealed on several occasions this year.
The NFL has long been plagued by off-field problems, most notably domestic violence, gun crime and drunk driving, and there have been tragic examples of all three this year.
Kansas City Chiefs linebacker Jovan Belcher fatally shot his girlfriend at their home moments before killing himself in front of his coach and general manager at the team's training facility in December.
A week later, Dallas Cowboys defensive tackle Josh Brent was charged with intoxication manslaughter after the car he was driving flipped over and caught fire, killing team mate Jerry Brown, a passenger in the car.
In May, former San Diego Chargers linebacker Junior Seau, a 12-time Pro Bowl selection, was found dead at his home in May, with a self-inflicted gunshot wound to the chest.
The manner of Seau's death and his families willingness to let his brain be examined for evidence of the impact of repeated injuries from his playing days, brought the issue of concussions back into focus.
Over 1,500 former football players have sued the NFL over head injuries and there have been accusations that the league concealed links between the game and brain injuries.
The NFL has disputed those allegations and points to its intensive education work on the issue and also the stricter new regulations covering treatment of players who are concussed.
BOUNTY PROGRAM
Concern over the potential impact of excessive violence on players was also behind NFL Commissioner Roger Goodell's strong sanctions against the New Orleans Saints, a story that hung over the league for much of the year.
The Saints were accused of running a bounty program from 2009-2011 that gave players cash rewards for knocking opponents out of games.
While Saints head coach Sean Payton was suspended for the entire season and other members of the coaching staff received shorter bans, much of the attention was on the sanctions given to four players, all of whom had their punishments overturned.
The decision by former NFL Commissioner Paul Tagliabue, with little compelling reasoning behind it, was a strange end to an affair which did little good for the league's image.
That image also took a hit from the contract dispute with referees which led to an early season lockout and resulted in some farcical decisions By the replacement referees.
The dispute culminated in botched call in a nationally televised game that handed Seattle victory over Green Bay and caused so much outrage that a deal was swiftly reached for the regular refs to return in early in the season.
Read More..

New generation of QBs emerge but league faces threats

MIAMI (Reuters) - A new generation of talented quarterbacks emerged in 2012 but a refereeing fiasco, worries over concussions and player behavior all left their mark on the National Football League (NFL).
The year was also a tantalizing tale of the Mannings with New York Giants quarterback Eli Manning winning his second Super Bowl title in four years with a win over New England in the same stadium where older brother Peyton played for Indianapolis.
After a year out with serious neck problems, Peyton Manning restarted his career with the Denver Broncos after 14 years with the Colts and quickly cast aside any doubts over his durability by leading his team to a playoff berth and division title.
Manning's revival came at the expense of Tim Tebow, the most talked about player in 2011, who has spent most of this year on the sidelines after being traded to the New York Jets.
'Tebow-mania' reached its peak in January when he led the Broncos to a playoff win over Pittsburgh but a crushing loss to the New England Patriots a week later was the last in a Denver uniform for the unorthodox quarterback.
Tebow's charisma, his noted religiosity and clean-cut good looks made him one of the most popular NFL players in years but that did not stop Jets head coach Rex Ryan leaving him as a bit-player and back-up to Mark Sanchez with most critics agreeing that Tebow's poor passing technique has hampered his career.
Tebow's fans understandably view 2012 as a year in which an exciting player's talent was wasted but in the big picture there has been no shortage of exciting new talent to enjoy in the NFL.
It was hard to imagine anyone exceeding the record-breaking impact made in 2011 by Carolina Panthers rookie quarterback Cam Newton but it did not take long for the top two picks in this year's NFL Draft, Indianapolis's Andrew Luck and Washington's Robert Griffin III respectively, to make an impact.
Luck ushered in the post-Manning era faster than anyone had imagined, with his outstanding passing and classy composure indicating he is a player who could enjoy similar dominance to his predecessor.
Griffin, or RG3 as he is widely known, is a different quarterback altogether - his speed and courage make him a genuine double-threat, able to rush but he is also, as critics of Tebow have noted, an accomplished pocket passer too.
Seattle's Russell Wilson and Miami's Ryan Tannehill have also made good impressions in their rookie years and with Tom Brady, Drew Brees, Aaron Rodgers, Ben Roethlisberger and the Mannings still on top of their game, it has become an era of unprecedented passing yards for quarterbacks.
NASTY UNDERBELLY
Given the key role quarterbacks play, the abundance of talent at the position should mark a golden-era for America's most popular league but the game has a nasty underbelly which has been revealed on several occasions this year.
The NFL has long been plagued by off-field problems, most notably domestic violence, gun crime and drunk driving, and there have been tragic examples of all three this year.
Kansas City Chiefs linebacker Jovan Belcher fatally shot his girlfriend at their home moments before killing himself in front of his coach and general manager at the team's training facility in December.
A week later, Dallas Cowboys defensive tackle Josh Brent was charged with intoxication manslaughter after the car he was driving flipped over and caught fire, killing team mate Jerry Brown, a passenger in the car.
In May, former San Diego Chargers linebacker Junior Seau, a 12-time Pro Bowl selection, was found dead at his home in May, with a self-inflicted gunshot wound to the chest.
The manner of Seau's death and his families willingness to let his brain be examined for evidence of the impact of repeated injuries from his playing days, brought the issue of concussions back into focus.
Over 1,500 former football players have sued the NFL over head injuries and there have been accusations that the league concealed links between the game and brain injuries.
The NFL has disputed those allegations and points to its intensive education work on the issue and also the stricter new regulations covering treatment of players who are concussed.
BOUNTY PROGRAM
Concern over the potential impact of excessive violence on players was also behind NFL Commissioner Roger Goodell's strong sanctions against the New Orleans Saints, a story that hung over the league for much of the year.
The Saints were accused of running a bounty program from 2009-2011 that gave players cash rewards for knocking opponents out of games.
While Saints head coach Sean Payton was suspended for the entire season and other members of the coaching staff received shorter bans, much of the attention was on the sanctions given to four players, all of whom had their punishments overturned.
The decision by former NFL Commissioner Paul Tagliabue, with little compelling reasoning behind it, was a strange end to an affair which did little good for the league's image.
That image also took a hit from the contract dispute with referees which led to an early season lockout and resulted in some farcical decisions By the replacement referees.
The dispute culminated in botched call in a nationally televised game that handed Seattle victory over Green Bay and caused so much outrage that a deal was swiftly reached for the regular refs to return in early in the season.
But while referee dispute, off-field troubles, bounty schemes and concussion fears generated plenty of negative attention for the league they did nothing to weaken the NFL's position as the dominant sport in North America and the top draw on U.S. television.
Read More..

BYU LB Van Noy scores 2 TDs in Poinsettia Bowl win

SAN DIEGO (AP) — Linebacker Kyle Van Noy forced a fumble in the end zone and recovered it for a touchdown, and scored on a 17-yard interception return, both in the fourth quarter, to lead BYU to a 23-6 victory over San Diego State in the Poinsettia Bowl on Thursday night.
The big plays swung the momentum for the Cougars (8-5) in what had been a tedious defensive struggle. San Diego State (9-4), playing in the hometown bowl for the second time in three years, missed the chance for its first 10-win season since 1977 and had its seven-game winning streak snapped.
Van Noy scored the game's first TD when he came free and hit Adam Dingwell in the end zone, forcing and recovering a fumble for a 10-6 lead.
Dingwell fumbled the snap on SDSU's next play from scrimmage and it was recovered by Jordan Johnson at the 14. Jamaal Williams scored on a run up the middle on the next play, BYU's second TD in 17 seconds.
Read More..

Fiscal cliff efforts ongoing, Boehner offers plan

WASHINGTON (AP) — President Barack Obama and House Speaker John Boehner pushed ahead on negotiating a broad deal to avert the "fiscal cliff," even as the GOP leader readied a backup plan Tuesday to pressure the White House with little time left to avoid a double hit on the economy.

With exactly two weeks to automatic tax hikes and spending cuts, Boehner offered a measure, dubbed "plan B," that would cancel tax increases due to take effect Jan. 1 on everyone earning $1 million or less, while allowing tax increases on those earning more than that amount.

Boehner insisted that his plan would address the burgeoning deficits and that the president has failed to produce a balance plan in weeks of post-election negotiations.

But the speaker's alternative was a non-starter with the White House and Democrats, and perhaps more damaging to its prospects, got a frosty reception from rank-and-file House Republicans in a morning closed-door meeting.

"The president is willing to continue to work with Republicans to reach a bipartisan solution that averts the fiscal cliff, protects the middle class, helps the economy, and puts our nation on a fiscally sustainable path," White House spokesman Jay Carney said. "But he is not willing to accept a deal that doesn't ask enough of the very wealthiest in taxes and instead shifts the burden to the middle class and seniors."

GOP aides said the leadership strategy is to pass the alternative plan in the House and send it to the Senate. There, Republicans would use their clout to block Democratic alternatives.

Even as he offered his alternative plan, Boehner indicated that negotiations with Obama continue on avoiding the fiscal cliff. Economists inside and outside the government have warned that the combination of spending cuts and tax hikes could stall a weak recovery and threaten a new recession.

"I continue to have hope that we can reach a broader agreement with the White House" that would cancel the tax increases and spending cuts now poised to begin in early January, Boehner, R-Ohio, told reporters.

But he said when it comes to offering a package that balances tax increases with spending cuts, "The president is not there yet."

Boehner presented his alternative to his GOP caucus, which reacted coolly to any plan that includes an increase in the tax rate. Conservatives and tea partyers signaled that Boehner faces a tough time rounding up the votes.

"I think it's a terrible idea," said Rep. Raul Labrador, R-Idaho. "For a lot of reasons."

When asked whether there was enough support among fellow Republicans to pass it, Labrador said, "I do not."

Rep. Jason Chaffetz, R-Utah, said he is in favor of preventing tax hikes for as many taxpayers as possible, but he's not ready to support Boehner's plan.

"I didn't see enough specificity to support it," Chaffetz said.

Rep. Jim Jordan of Ohio, the outgoing chairman of the conservative Republican Study Committee, said, "I'm not doing cartwheels over it, that's for sure."

Jordan said Boehner's plan crosses a dangerous line by enacting higher tax rates for anyone.

"I think it's a mistake for the Republican Party, so that's what I think a lot of members are struggling with," said the Ohio Republican.

In the Senate, Democratic Leader Harry Reid said the Boehner plan could not pass and urged the speaker to work out an agreement with the president.

"Now is the time to show leadership, not kick the can down the road," Reid said. "Speaker Boehner should focus his energy on forging a large-scale deficit reduction agreement. It would be a shame if Republicans abandoned productive negotiations due to pressure from the tea party, as they have time and again."

In addition to allowing a tax increase for million-dollar earners, the Boehner plan would prevent an expansion of the alternative minimum tax that would otherwise hit 28 million middle- and upper-class Americans with an average $3,700 increase on their 2012 tax returns.

The plan also would extend the current maximum 35 percent tax rate on inheritance, exempting the first $5 million. That tax rate is slated to rise to 55 percent on Jan. 1, with only a $1 million exemption.

Under the plan, the automatic, across-the-board spending cuts of $1.09 trillion to domestic and defense programs would go into effect.

Boehner said GOP efforts to cull savings from Medicare by increasing the eligibility age from 65 to 67 could wait until next year. That source of savings had been an important demand from Republicans earlier in Boehner's negotiations with the White House.

Boehner aides said the call for a separate tax bill does not mean the Republican is cutting off negotiations with Obama on averting the full slate of tax hikes and spending cuts due to take effect next year. Obama and Boehner have each made significant concessions in recent days, signaling a new stage in the negotiations.

Boehner's latest move is an attempt to give Republicans political cover if Washington fails to reach a deal before the end of the year and taxes increase on all income earners.

In the negotiations, the president has dropped his long-held insistence that taxes rise on individuals earning more than $200,000 and families making more than $250,000. He is now offering a new threshold of $400,000 and lowering his 10-year tax revenue goals from the $1.6 trillion he had argued for a few weeks ago.

Obama and Boehner met privately at the White House on Monday, and then spoke again on the phone later that night. Boehner huddled with House GOP members on Capitol Hill Tuesday morning to discuss the status of the talks and review Obama's latest offer.

"We have to stop whatever tax rate increases we can," Boehner said in the meeting, according to prepared remarks released by an aide. "In the absence of an alternative, as of this morning, a "modified Plan B" is the plan."

Unless Congress acts, tax rates will increase on all income earners on Jan. 1. Boehner first opposed raising rates on any income earners, including the wealthiest Americans, but agreed on Friday to accept an increase in tax rates for taxpayers who earn more than $1 million. Boehner's plan would raise about $1 trillion in taxes over 10 years.

In return, Obama also abandoned his demand for permanent borrowing authority. Instead, he is now asking for a new debt limit that would last two years, putting its renewal beyond the politics of a 2014 midterm election.

And in a move sure to create heartburn among some congressional Democrats, Obama is proposing lower cost-of-living increases for Social Security beneficiaries, employing an inflation index that would have far-reaching consequences, including pushing more people into higher income tax brackets.

Those changes, as well as Obama's decision not to seek an extension of a temporary payroll tax cut, would force higher tax payments on the middle class, a wide swath of the population that Obama has repeatedly said he wanted to protect from tax increases.

As public posturing has given way to pragmatism, both sides still seem willing to lock in on a substantial agreement rather than just putting off a fiscal day of reckoning. To that end, Obama has conceded that a big bargain would require giving up some of his proposals.

"I understand that I don't expect the Republicans simply to adopt my budget," he said during his post-election news conference last month. "That's not realistic. So, I recognize we're going to have to compromise."

Despite signs of progress, there are still plenty of disputes to iron out. And people familiar with Obama's proposal were careful not to describe it as his final offer.

The Obama plan seeks $1.2 trillion in revenue over 10 years and $1.2 trillion in 10-year spending reductions. Boehner aides say the revenue is closer to $1.3 trillion if revenue triggered by the new inflation index is counted, and they say the spending reductions are closer to $930 billion if one discounts about $290 billion in lower estimated debt interest.
Read More..

ECB'S Praet says France must cut spending and reform

PARIS (Reuters) - France must cut spending to meet its budget deficit target and undertake structural reforms to boost competitiveness, European Central Bank Executive Board Member Peter Praet said on Tuesday.

President Francois Hollande has pledged to slash the public deficit to 3 percent of economic output next year from an estimated 4.5 percent this year, but has so far shied away from deep-reaching spending cuts many economists say are necessary.

In an interview with French daily Le Figaro, Praet said the government's deficit-cutting plans relied too much on tax rises, and that over the long term it was vital to implement reform.

"France has too often resisted change," Praet said.

"There is a consensus now in France on the need to improve public finances and competitiveness. To do that, structural reform is needed."

France's Socialist government launched a public spending review on Tuesday, but stopped short of outlining budget cuts, focusing instead on streamlining administrative procedures in order to find savings.

At 57 percent of GDP, France's public spending is among the highest in the developed world, and Praet said deeper measures were needed to change the structure of outlays to keep finances on track.

Last month's decision to cut labour costs by introducing tax rebates for companies was a step in the right direction, he said, but the move was financed by tax rises such as a hike in VAT which would ultimately limit its impact.

Moody's rating agency last month stripped France of its triple-A credit rank, warning it would downgrade the country's debt further if the government failed to implement reforms such as a labour market overhaul.

The agency said the growth forecasts built into the government's medium-term budget plan were overly optimistic, and changes need to be made to rigid labour laws and to goods and services markets to make the country more competitive.

France's growth forecast of 0.8 percent for next year has been questioned by economists, given that the broader euro zone economy has slipped into recession.

Praet said that despite the economic downturn, France and other countries in the bloc should not back away from meeting a 3 percent deficit target.
Read More..

Wall Street climbs on economy bets as it looks past "cliff"

NEW YORK (Reuters) - U.S.  stocks rallied on strong volume on Tuesday, capping off the S&P 500's best two-day run in a month, on confidence that a deal would be struck in Washington to avoid painful spending cuts and tax hikes that could hurt the economy.

Banks, energy and technology - sectors that would benefit during economic expansion - led gains as investors remain confident that lawmakers will come to an agreement to avoid the so-called "fiscal cliff" deadline at the end of the year.

The PHLX oil services sector index <.osx> jumped 3.1 percent, with eight of its 15 components up 3 percent or more.

"The view is that the economy is getting better, and that is always good for energy demand," said Shawn Hackett, president at Hackett Financial Advisors in Boynton Beach, Florida.

Hackett said the United States would avoid "whatever the cliff means" for the economy, allowing investors to focus on growth.

President Barack Obama's most recent offer to Republicans in the ongoing budget talks makes concessions on taxes and social programs spending. House Speaker John Boehner said the offer is "not there yet," though he remains hopeful about an agreement. Senate Democrats, however, have expressed concern about cuts to Social Security.

Financial stocks shot higher, as traders bet on a greater demand for loans and a steepening of the yield curve. U.S. government debt sold off Tuesday, with the benchmark 10-year U.S. Treasury note's yield briefly hitting its highest since late October.

The S&P financial sector <.gspf> added 1.5 percent.

The Dow Jones industrial average <.dji> rose 115.57 points, or 0.87 percent, to 13,350.96 at the close. The S&P 500 <.spx> gained 16.43 points, or 1.15 percent, to 1,446.79. The Nasdaq Composite <.ixic> added 43.93 points, or 1.46 percent, to 3,054.53.

It was the S&P 500's first back-to-back gain of more than 1 percent since late July.

Stocks of smaller companies outperformed the broader market, with the Russell 2000 <.rut> up 1.5 percent.

Shares of firearm makers sank in the aftermath of a school shooting in Newtown, Connecticut, on Friday that killed 20 young children and six adults.

Smith and Wesson fell 10 percent to $7.79 on its largest-ever daily volume, though it was still up about 77 percent so far this year. Sturm Ruger and Co slid 7.7 percent Tuesday to $40.60.

Private equity firm Cerberus Capital Management said it would sell gunmaker Freedom Group, whose Bushmaster AR-15 rifle was used in the Connecticut massacre. Dick's Sporting Goods suspended the sale of certain semi-automatic rifles in its stores nationwide.

Technology shares rose, led by Apple , up 2.9 percent at $533.90 after losing nearly 13 percent in the last two weeks. The S&P Information Technology Index <.gspt> rose 1.7 percent.

Arbitron Inc surged 23.6 percent to $47.03 after Nielsen Holdings NV agreed to buy the media and marketing research firm in a deal worth $1.26 billion. Nielsen rose 4.4 percent to $30.92.

About 7.4 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, more than the daily average so far this year of about 6.5 billion shares.

On the NYSE, roughly 14 issues rose for every five that fell, while on the Nasdaq, advancers outnumbered decliners by a ratio of about 5 to 2.
Read More..

Analysis: U.S. policy gridlock holding back economy? Maybe not

(Reuters) - Washington thinks a resolution of the tense debate over the national debt will unlock a burst of economic growth by lifting uncertainty that has stymied investment.

It is a widely held view on Wall Street as well, derived from the glaring signs of weak business confidence over the last year as America struggles to get its fiscal house in order.

However, evidence for this belief is far from clear and is an issue of considerable debate, and even some businesses wonder how big a factor uncertainty is.

In Lexington, Kentucky, new sales are slipping at Gray Construction, a family-owned builder of factories and distribution centers. Clients say they are holding back because America could fall into recession if Congress and the White House don't strike a deal soon to avoid a "fiscal cliff" of some $600 billion in tax increases and government spending cuts due to begin in January.

"They're saying: 'Let's wait. Let's see what happens,'" Chief Executive Stephen Gray said.

And yet, the company, which also does design and engineering work, still has a record backlog of work and has hired about 30 people in the last six months.

The company's CEO has seen little dips in the sales pipeline before and said it's hard to know how different business would be if Washington's politicians inspired more confidence. As it is, Gray sees no reason to stop hiring: "I'm not super-worried."

Like Gray, economists are also unsure how much they can attribute business decisions to something so indeterminate as uncertainty, and they are divided over the degree to which erratic policymaking has dragged on the economy in recent years, if it has at all.

Answering this question could give important clues on how the economy will perform next year, whether or not Congress strikes a deal to avoid the fiscal cliff.

HOLDING BACK

Toward that end, researchers at Stanford University and the University of Chicago have created an index to gauge just how murky the future looks.

They count soon-to-expire tax provisions and mentions of uncertainty in major newspapers, as well as how much economic forecasters disagree on things like future government spending.

In a sample period between 1985 and 2011, they found heightened uncertainty went hand in hand with weak economic growth and hiring. Their index hit an all-time high last year when congressional gridlock nearly led the United States to default on its debt. It remains high, with a host of temporary tax cuts due to expire at year's end and the debate over the fiscal cliff regularly splashed across front pages.

Nicholas Bloom, a Stanford economist who helped make the uncertainty index, says weak levels of investment, along with surveys in which businesses say they are holding back because of concerns over the direction of policy, suggest uncertainty has weighed on growth since late 2011.

This year, business investment on capital goods - things like equipment and machinery - has fallen short of what economists would expect considering the $1.7 trillion in cash that companies were holding in the third quarter.

New orders for non-defense capital goods other than aircraft fell 7 percent in the year through October, while total business investment in the third quarter dropped the most since 2009.

Bloom says businesses would spend their cash more readily if politicians united around a grand bargain to put U.S. fiscal policy on a stable path. Using past correlations between uncertainty and economic growth as a guide, he estimates that lifting uncertainty could add about 3 percent to gross domestic product over the next 18 months - enough growth to create roughly 2 million jobs.

"There should be a surge of investment and hiring," he said.

That would be a big boost to the lackluster 1.9 percent growth rate many economists expect next year.

A deal in Congress that avoids the fiscal cliff while taming the nation's $16 trillion debt over the long term may come by year-end or in early 2013. It is also plausible Washington will avoid the fiscal cliff but kick the can into 2013 when it comes to the details of longer-term deficit planning.

Republican House Speaker John Boehner, who has looked exasperated in public over the fiscal debate, has edged closer to President Barack Obama's key demands in the last few days, and the president made a counteroffer on Monday that could put a deal within reach. The two sides still differ on where to set tax rates and how to overhaul social spending programs.

The tense negotiations have corporate America on edge.

So far this month, companies have submitted 148 statements to the Securities and Exchange Commission expressing concern about the fiscal cliff. In November, there were 215 such warnings, up from 80 in October and none prior to May. About half of 200 big companies surveyed by American Express last month said Congress won't resolve the fiscal cliff this year.

Chemical maker DuPont is trimming its capital investment plans due to uncertainty. "We're not going to spend as much as we thought next year," DuPont CEO Ellen Kullman said last week in an interview.

Treasury Secretary Timothy Geithner told CNBC earlier this month that reaching a sensible fiscal deal would get rid of the biggest roadblock to stronger growth. Many business leaders and lawmakers agree.

NO SURE THING

However, some economists doubt uncertainty has played such a central role holding back the U.S. economy. If they are right, growth next year could disappoint even if politicians wow investors with a grand bargain.

Researchers at Goldman Sachs say the weak economy might be boosting measures of uncertainty as much as the other way around.

The bank doesn't rule out an "uncertainty shock" over the next few months - most economists think uncertainty must matter for something - but its researchers crunched numbers and found there might be a simpler explanation for the disappointing levels of business spending.

The bank's economists calculated how much the business sector would normally be investing given its assets and the stage of the business cycle, and found the recent shortfall could be mostly explained by a lack of available credit.

Rather than being too scared to invest, companies might simply be having trouble getting loans. That makes sense considering many banks are still licking their wounds from the recent financial crisis.

"The evidence that a policy uncertainty shock is already depressing activity is far from unequivocal," Goldman Sachs economists Jan Hatzius and Sven Jari Stehn wrote in a recent note.

Their research suggests some of the hype over uncertainty is overblown. Indeed, much of the country is not paying attention to the fiscal cliff debate.

A poll by Gallup conducted December 1-2 showed only 60 percent of Americans were following the talks at least somewhat closely. In the history of national events tracked by Gallup, that ranks somewhere between the Iraqi election of 2005 and the confirmation hearings for Supreme Court Justice Samuel Alito in 2006.

Households, whose spending drives more than two-thirds of the economy, are not as worried as the country's CEOs, although a recent consumer sentiment survey showed concerns appeared to grow in early December.

Some economists say the most important issue for Congress is not to resolve policy uncertainty but rather to strike a fiscal deal that doesn't hurt the economy by ushering in harsh budget austerity measures.

Surveys of small businesses show companies are worried about higher taxes, but over the last few months and years they have worried even more about poor sales. Adjusting for inflation, household incomes are still lower than they were before the recession. This has depressed spending, a situation that could be exacerbated by tighter fiscal policy.

"The biggest uncertainty is whether the U.S. consumer is really back," said Stephanie Kelton, an economist at the University of Missouri-Kansas City.
Read More..

South Africa's Zuma boosted by Ramaphosa return in ANC win

BLOEMFONTEIN, South Africa (Reuters) - South Africa's ruling African National Congress (ANC) re-elected President Jacob Zuma as its leader on Tuesday, setting him up for seven more years as head of state of Africa's biggest economy.

Nelson Mandela's 100-year-old liberation movement also chose respected businessman Cyril Ramaphosa as his deputy, seeking to repair the image of a Zuma administration battered by corruption scandals and strikes and facing growing discontent among the poor black majority.

More than 4,000 ANC delegates crammed into a marquee in the central city of Bloemfontein erupted into wild cheers when Zuma was confirmed in the top party post after comfortably seeing off a challenge by Deputy President Kgalema Motlanthe.

Given the ANC's dominance at the ballot-box less than two decades after the end of apartheid, 70-year-old Zuma is virtually assured a second, five-year term as President of South Africa in 2014 elections.

The rand briefly edged higher against the dollar, reflecting relief among investors at the prospect of policies remaining largely unchanged.

After the vote, the beaming president, who secured 2,995 votes out of 3,977 cast, walked on stage to shake hands with his fellow 'comrades' - a label reflecting the ANC's roots in the communist-backed struggle against decades of white-minority rule.

Zuma, a polygamous Zulu traditionalist, came to power in 2009 amid the first recession in 18 years and has had a chequered economic record, culminating in violent labor unrest in the mines this year that triggered two downgrades in South Africa's credit ratings.

He has also been dogged by personal scandals, including fathering a child by the daughter of a close friend. Despite this, his popularity within the party is overwhelming.

"I don't care what people say about Jacob Zuma," said Sinovuyo Kley, a delegate from the impoverished Eastern Cape. "When you hear him sing, you know he is one with the people. He speaks our language and knows our struggles."

RAMAPHOSA RETURNS

Zuma's re-election had looked likely for much of the year, making the main talking point of the five-day Bloemfontein conference the political renaissance of Ramaphosa after a decade-long absence to focus on his business interests.

Attention was also diverted by the arrest of four whites on suspicion of a plot to bomb the meeting and execute Zuma and top ministers as part of a plan to carve an independent Afrikaner state out of Mandela's "Rainbow Nation".

Having risen to prominence as a charismatic union leader in the 1980s, Ramaphosa became the ANC's main negotiator in the talks that led to historic all-race elections in 1994 and Mandela's appointment as South Africa's first black president.

He was also tipped as a successor to the revered Mandela - now 94 and recovering in hospital from a lung infection - but gradually removed himself from politics when the job went to party stalwart Thabo Mbeki in 1999.

It was unclear just how much impact Ramaphosa's inclusion in Zuma's inner circle could have on the ANC government.

Some analysts say he should help push through plans to lift long-term economic growth and stop South Africa's competitive slide against fast-growing economies in Asia and South America.

However, others who know his business style told Reuters he tended not to throw his weight around in company board-rooms, suggesting he might avoid challenging South Africa's politically powerful unions.

"He is surprisingly quiet and non-confrontational on boards," one person who knows Ramaphosa said.

Others suggest that his ranking as South Africa's second richest black businessman could limit his appeal to the legions of poor and jobless who are increasingly doubting the ANC's post-apartheid promise to deliver "a better life for all".

LOOMING DOWNGRADE

"Looking further ahead, we remain doubtful that Zuma can oversee the reforms needed to pull the South African economy out of its current rut," said Shilan Shah, Africa economist at UK-based Capital Economics.

There is precious little time to make an impact, with Fitch expected in January to follow Moodys and Standard & Poor's in cutting South Africa's credit rating because of concerns about sluggish growth, forecast at 2.5 percent this year.

"The leadership issue is never really decisive for the market," said Nomura emerging markets analyst Peter Attard-Montalto. "It's always interested in policy and that's far more what the ratings agencies are looking at."

Zuma may also find his Bloemfontein victory dance cut short, with a poll published this week putting his nationwide approval rating at 52 percent, in contrast to 70 percent for the outgoing Motlanthe. This reflects just how much the internal politics of the ruling ANC is insulated from daily realities.

The opposition Democratic Alliance (DA) is starting to make in-roads into ANC support at local and regional level despite its reputation among many black South Africans as the party of white privilege. The DA said it had been inundated with membership inquiries within an hour of Zuma being re-elected.

Even within his own party, young South Africans are snapping at Zuma's heels, demanding political and economic change for a generation that has little memory of apartheid but which remains at the sharp end of 25 percent unemployment.

"The young people of South Africa are tired of promises and need action for economic freedom in our lifetime," the ANC Youth League, which had backed Motlanthe, said in a statement.
Read More..