Shares fall, euro slides as Monti sparks Italy uncertainty

LONDON (Reuters) - The euro swooped towards a two-week low and shares and Italian bonds fell on Monday, after Italian Prime Minister Mario Monti's decision to resign early triggered fears of a fresh bout of euro zone uncertainty.

Monti announced over the weekend he would resign once the country's budget for 2013 is approved, raising questions over who will take the reins of the euro zone's third largest economy, still a central focus of the bloc's debt crisis.

Top European shares on the FTSEurofirst 300 <.fteu3> opened down 0.3 percent with a 2.4 percent slump on Milan's Ftse Mib <.ftmib> and a 1 percent drop on Madrid's IBEX <.ibex> matched by smaller falls in London <.ftse>, Paris <.fchi> and Frankfurt <.dax>.

The euro slid 0.25 percent to $1.2900 in early trading towards a two-week low of $1.2876 plumbed on Friday.

In bond markets Italian bonds fell sharply with yields on benchmark 10-year bonds up 24 basis points at 4.78 percent.

"If Monti's pro-euro stance is to back off, that should raise concerns about the euro," said Junya Tanase, chief currency strategist at JPMorgan Chase in Tokyo.

Balancing the political concerns were data from China which showed factory output in the world's number two economy accelerated to eight-month highs in November, and a drop in U.S. unemployment figures on Friday.

Copper prices hit their highest in almost two months on the data, gold firmed 0.2 percent to around $1,707 an ounce, while oil prices snapped five straight days of losses to remain above $107 a barrel.

"It does appear, based on the evidence of the data, that the Chinese economy has bottomed out," said Ben Le Brun, a market analyst at OptionsXpress in Sydney.

(Additional reporting by Manash Goswami in Singapore; Editing by Peter Graff)

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Egypt president scraps decree that sparked protests

CAIRO (Reuters) - Egyptian President Mohamed Mursi has cancelled a decree that gave him sweeping powers and sparked deadly violence, but did not delay this month's referendum on a new constitution as his opponents had demanded.

The announcement that Mursi had scrapped his November 22 decree followed hours of talks on Saturday at his presidential palace, billed as a "national dialogue" but which was boycotted by his main opponents and had little credibility among protesters.

One opposition group dismissed Mursi's efforts at appeasement as the "continuation of deception."

His opponents have demanded Mursi scrap the vote on December 15 on a constitution that was fast-tracked through an assembly led by Mursi's Muslim Brotherhood and other Islamists. Liberals and others had walked out, saying their voices were not being heard.

Islamists have insisted the referendum should go ahead on time, saying it is needed to complete a democratic transition still incomplete after Hosni Mubarak's overthrow 22 months ago.

The military, which had run the nation during a turbulent interim period after Mubarak fell, stepped into the crisis on Saturday to tell feuding factions that dialogue was essential to avoid "catastrophe." But a military source said that was not a prelude to the army retaking control of Egypt or the streets.

After Saturday's talks, the president issued a new decree in which the first article "cancels the constitutional declaration" announced on November 22, the spokesman for the dialogue, Mohamed Selim al-Awa, told a news conference held around midnight.

But he said the constitutional referendum would go ahead next Saturday, adding that although those at the meeting had discussed a postponement, there were legal obstacles to taking such a step.

The political turmoil has exposed deep rifts in the nation of 83 million between Islamists, who were suppressed for decades, and their rivals, who fear religious conservatives want to squeeze out other voices and restrict social freedoms. Many Egyptian just crave stability and economic recovery.

RESPONSE

Islamists and more liberal-minded opponents have both drawn tens of thousands of supporters to the streets in rival rallies since Mursi's decree last month. Seven people were killed in violence around the presidential palace, which has been ringed by tanks.

The spokesman for the main opposition coalition, the National Salvation Front, which stayed away from Saturday's talks, said his group would meet on Sunday to discuss a response to Mursi's initiative to cancel his old decree.

But Hussein Abdel Ghani added: "My first personal impression is that it is a limited and insufficient step. We repeatedly said that among our top demands is for the referendum to be delayed."

The April 6 movement, which helped galvanize street protests against Mubarak, said in a statement about the outcome of Saturday's talks, "What happened is manipulation and a continuation of deception in the name of law and legitimacy."

The new decree excluded some elements from the old decree that angered the opposition, including an article that gave Mursi broad powers to confront threats to the revolution or the nation, wording opponents said gave him arbitrary authority.

Another article in the old decree had put beyond legal challenge any decision taken by the president since he took office on June 30 and until a new parliament was elected, a step that can only happen when a new constitution is in place.

That was not repeated, but the new decree said that "constitutional declarations including this declaration" were beyond judicial review.

DIALOGUE

The new decree outlined steps for setting up an assembly to draft a new constitution should the current draft be rejected in Saturday's referendum.

In addition, the opposition was invited to offer suggested changes to the new constitution, echoing an earlier initiative by Mursi's administration for changes to be discussed and agreed on by political factions and put to the new parliament to approve.

Amid the violence and political bickering, the army has cast itself primarily as the neutral guarantor of the nation.

"The armed forces affirm that dialogue is the best and only way to reach consensus," the military statement said. "The opposite of that will bring us to a dark tunnel that will result in catastrophe and that is something we will not allow."

The army might be pushing the opposition to join the dialogue and for Mursi to do more to draw them in, said Hassan Abu Taleb of the Al Ahram Center for Political and Strategic Studies.

He discounted the chance of direct military intervention, adding, "They realize that interfering again in a situation of civil combat will squeeze them between two rocks."

But the military seemed poised to take a more active role in security arrangements for the upcoming referendum.

A Cabinet source said the Cabinet had discussed reviving the army's ability to make arrests if it were called upon to back up police, who are normally in charge of election security.

According to the state-run daily al-Ahram, an expanded military security role might extend to the next parliamentary election and, at the president's discretion, even beyond that.

(Additional reporting by Tamim Elyan; Editing by Peter Cooney)

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Michelle Branch's Daughter's Dream Job Is For the Birds - Literally

Mom & Babies
Celebrity Baby Blog

12/03/2012 at 02:00 PM ET

Sthanlee B. Mirador/Shooting Star

It seems as if Michelle Branch‘s daughter won’t be following in her musical footsteps any time soon.

While the Grammy Award winning singer/songwriter and her husband, bass player Teddy Landau, are no strangers to the stage, 7-year-old Owen Isabelle has found her niche in nature.

“I think because my husband and I are both musicians, she kind of feels like she has to do something a little bit more serious than her mom and dad,” the Cook Taste Eat host, 29, tells PEOPLE.

“Since she was 3 or 4 years old, she was always into science and dinosaurs and watching nature shows.”

In particular, all-things aviary has struck a chord with the little girl, who has already happily declared her future dream job.

“She’s obsessed with birds. She’s been begging to have a pet bird, which I will not allow,” saya Branch. “[Owen] claims she’s going to be an ornithologist when she grows up. Literally, it’s birds 24/7 — every book she wants is birds, stickers, drawings, clothes, everything.”

And as sure as she is of her pending career plans, Owen is just as confident in her political views. Happy to reveal who would have earned her support, the little girl has no qualms about divulging the deciding factor during the recent Presidential election.

“Around election time she said, ‘You know Mom, if I could vote, I would vote for Barack Obama.’ And I said, ‘Oh, really, that’s so interesting. Why?’” Branch recalls.

“And she said, ‘Well, remember that one time we got to go to the White House and meet him? I don’t vote for strangers.’”

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');var targetVideoWidth = 300;brightcove.createExperiences();/* iPhone, iPad, iPod */if ((navigator.userAgent.match('iPhone')) || (navigator.userAgent.match('iPad')) || (navigator.userAgent.match('iPod')) || (location.search.indexOf('ipad=true') > -1)) { document.write('

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Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

___

Johnson can be reached at https://twitter.com/GeneAPseattle

Read More..

Wall Street Week Ahead: "Cliff" worries may drive tax selling

NEW YORK (Reuters) - Investors typically sell stocks to cut their losses at year end. But worries about the "fiscal cliff" - and the possibility of higher taxes in 2013 - may act as the greatest incentive to sell both winners and losers by December 31.

The $600 billion of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-loss selling even more appealing than usual.

Tax-related selling may be behind the weaker trend in the shares of market leader Apple , analysts said. The stock is down 20 percent for the quarter, but it's still up nearly 32 percent for the year.

Apple dropped 8.9 percent in this past week alone. For a stock that gained more than 25 percent a year for four consecutive years, the embedded capital gains suddenly look like a selling opportunity if one's tax bill is going to jump sharply just because the calendar changes.

"Tax-loss selling is always a factor (but) tax-gains selling has been a factor this year," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"You have a lot of high-net-worth individuals in taxable accounts, and that could be what's affecting stocks like Apple. If you look at the stocks that people have their largest gains in, they seem to be under a little bit more pressure here than usual."

Of this year's top 20 performers in the S&P 1500 index, which includes large, small and mid-cap stocks, all but four have lost ground in the last five trading sessions.

The rush to avoid higher taxes on portfolio gains could cause additional weakness.

The S&P 500 ended the week up just 0.1 percent after another week of trading largely tied to fiscal cliff negotiation news, which has pushed the market in both directions.

A PAIN PILL FROM THE FED?

Next week's Federal Reserve meeting could offer some relief if policymakers announce further plans to help the lackluster U.S. economy. The Federal Open Market Committee will meet on Tuesday and Wednesday. The policy statement is expected at about 12:30 p.m. on Wednesday after the conclusion of the meeting - the Fed's last one for the year.

Friday's jobs report showing non-farm payrolls added 146,000 jobs in November eased worries that Superstorm Sandy had hit the labor market hard.

"After the FOMC meeting, I think it's going to be downhill from there as worries about the fiscal cliff really take center stage and prospects of a deal become less and less likely," said Mohannad Aama, managing director of Beam Capital Management LLC in New York.

"I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year," he said.

MORE VOLUME AND VOLATILITY

Volume could increase as investors try to shift positions before year end, some analysts said.

While most of that would be in stocks, some of the extra trading volume could spill over into options, said J.J. Kinahan, TD Ameritrade's chief derivatives strategist.

Volatility could pick up as well, and some of that is already being seen in Apple's stock.

"The actual volatility in Apple has been very high while the market itself has been calm. I expect Apple's volatility to carry over into the market volatility," said Enis Taner, global macro editor at RiskReversal.com, an options trading firm in New York.

Shares of Apple, the largest U.S. company by market value, registered their worst week since May 2010. In another bearish sign, the stock's 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38.

"There's a lot of tax-related selling happening now, and it will continue to happen. Apple is an example, even (though) there are other factors involved with Apple," Aama said.

While investors may be selling stocks to avoid higher taxes in 2013, companies may continue to announce special and accelerated dividend payments before year end. Among the latest, Expedia announced a special dividend of 52 cents a share to be paid on December 28.

To be sure, the big sell-off in stocks following the November 6 election was likely related to tax selling, making it hard to judge how much more is to come.

Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said there's a decent chance that the market could rally before year end.

"Even with little or spotty news that one would put in the positive bucket regarding the (cliff) negotiations, the market has basically hung in there, and I think it's hung in there in anticipation of something coming," he said.

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: caroline.valetkevitch(at)thomsonreuters.com)

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal; Multimedia versions of Reuters Top News are now available for:; 3000 Xtra: visit Reuters Top News; BridgeStation: view story .134; For London stock market outlook please click on .L/O; Pan-European stock market outlook .EU/O; Tokyo stock market outlook .T/O; Wall St Week Ahead runs every Friday.)

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Egyptian opposition to shun Mursi's national dialogue

CAIRO (Reuters) - President Mohamed Mursi was expected to press ahead on Saturday with talks on ways to end Egypt's worst crisis since he took office even though the country's main opposition leaders have vowed to stay away.

Cairo and other cities have been rocked by violent protests since November 22, when Mursi promulgated a decree awarding himself sweeping powers that put him above the law.

The upheaval in the most populous Arab nation, following the fall of Hosni Mubarak last year, worries the West, in particular the United States, which has given it billions of dollars in military and other aid since Egypt made peace with Israel in 1979.

Mursi's deputy raised the possibility that a referendum set for December 15 on a new constitution opposed by liberals might be delayed. But the concession only goes part-way towards meeting the demands of the opposition, who also want Mursi to scrap the decree awarding himself wide powers.

On Friday, large crowds of protesters surged around the presidential palace, breaking through barbed wire barricades and climbing on tanks guarding the seat of Egypt's first freely elected president, who took office in June.

As the night wore on, tens of thousands of opposition supporters were still at the palace, waving flags and urging Mursi to "Leave, leave".

"AS LONG AS IT TAKES"

"We will stay here for as long as it takes and will continue to organize protests elsewhere until President Mursi cancels his constitutional decree and postpones the referendum," said Ahmed Essam, 28, a computer engineer and a member of the liberal Dostour party.

Vice President Mahmoud Mekky issued a statement saying the president was prepared to postpone the referendum if that could be done without legal challenge.

Mursi's planned dialogue meeting was expected to go ahead on Saturday in the absence of most opposition factions. "Everything will be on the table," a presidential source said.

Mursi could be joined by some senior judiciary figures and politicians such as Ayman Nour, one of the candidates in Mubarak's only multi-candidate presidential race, in 2005, in which he was unsurprisingly trounced.

The opposition has demanded that Mursi rescind the decree giving himself wide powers and delay the vote set for December 15 on a constitution drafted by an Islamist-led assembly which they say fails to meet the aspirations of all Egyptians.

EXPAT VOTE DELAYED

The state news agency reported that the election committee had postponed the start of voting for Egyptians abroad until Wednesday, instead of Saturday as planned. It did not say whether this would affect the timing of voting within Egypt.

Ahmed Said, leader of the liberal Free Egyptians Party, told Reuters that delaying expatriate voting was intended to seem like a concession but would not change the opposition's stance.

The opposition organized marches converging on the palace which Republican Guard units had ringed with tanks and barbed wire on Thursday after violence between supporters and opponents of Mursi killed seven people and wounded 350.

Islamists, who had obeyed a military order for demonstrators to leave the palace environs, held funerals on Friday at Cairo's al-Azhar mosque for six Mursi partisans who were among the dead.

"With our blood and souls, we sacrifice to Islam," they chanted.

A group led by leftist opposition leader Hamdeen Sabahy has called for an open-ended protest at the palace.

Some pro-Mursi demonstrators gathered in a mosque not far from the palace, but said they would not march towards the palace to avoid a repeat of the violence that took place on Wednesday night.

In a speech late on Thursday, Mursi had refused to retract his decree or cancel the referendum on the constitution, but offered talks on the way forward after the referendum.

The National Salvation Front, the main opposition coalition, said it would not join the dialogue. The Front's coordinator, Mohamed ElBaradei, a Nobel peace laureate, dismissed the offer as "arm-twisting and imposition of a fait accompli".

ElBaradei said that if Mursi were to scrap the decree with which he awarded himself extra powers and postpone the referendum "he will unite the national forces".

Murad Ali, spokesman for the Muslim Brotherhood's Freedom and Justice Party, said opposition reactions were sad: "What exit to this crisis do they have other than dialogue?" he asked.

(This story corrects Mursi's title to president in paragraph 1)

(Additional reporting by Omar Fahmy; Writing by Giles Elgood; Editing by Michael Roddy and Paul Tait)

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New Sony online store offers remote downloads to PlayStation and mobile devices

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Susan Powell's Father-in-Law Secretly Took 4,500 Pictures of Her

12/07/2012 at 07:30 PM EST

Wrapping up a year that has brought unimaginable frustration and heartbreak, Susan Powell's family marked the three-year anniversary of her disappearance at a ceremony this week near where her two sons are buried.

"It's a hard time of year," Susan's father, Chuck Cox, tells PEOPLE. "Our daughter's still missing. Someday, we will find out what happened to her."

He added that he is not sure what to make of a West Valley City, Utah, police announcement Thursday that their investigation into Susan's Dec. 6, 2009 disappearance remains active but "has been scaled down," with a reduction in the number of full-time investigators working the case.

The announcement came at the same time that more evidence emerged of the alleged obsession Susan's father-in-law, Steven Powell, had toward her. Authorities released nearly 4,500 pictures that they say he secretly took of her at home and elsewhere.

Cox says he's hopeful that the police are still doing everything possible to solve Susan's case, but he hasn't ruled out suing the department for failing to arrest Susan's husband, Josh Powell, for her murder.

More than two years after Susan's disappearance, Josh on Feb. 5 murdered the couple's two sons and committed suicide by blowing up his house.

Cox's lawyer, Anne Bremner, says Cox "goes back and forth" over whether to sue West Valley City. "He wants them to find her. A lawsuit can have a chilling affect on things."

Cox and Bremner say they do plan to file a lawsuit against the state of Washington for continuing to give Josh visitation with his children despite what they claim were mounting concerns regarding his mental stability.

Although Cox and the police believe that Josh Powell knew more than anyone what happened to Susan, they also strongly suspect that his father, Steven Powell, should still be looked at more closely.

Steven Powell

Ted S. Warren / AP

The Coxes hoped Steve Powell's voyeurism trial in May would unearth some answers but it did not. Powell invoked his Fifth Amendment right against self-incrimination when asked in jail about Susan.

In numerous interviews with PEOPLE, Steve and Josh Powell denied any involvement in Susan's disappearance and have suggested that she ran off with another man.

Steve Powell was prosecuted for surreptitiously photographing his neighbor's young daughters (and is serving a 30-month sentence), but the investigation also unearthed journals in which Powell described his interest in his daughter-in-law, as well as the thousands of photos, which were released Thursday to the Associated Press.

In a journal entry, Steven Powell recalls a sexually charged dream in which Susan asks him, “Do you think I would make a good wife for you?” None of the pictures show Susan naked, although there are images of her crotch and backside.

"We think he knows exactly where our daughter is," Cox says.

Once Susan disappeared, Josh sold the family's home in Utah and moved with the boys into Steven Powell's house in Puyallup, Wash., only about two miles from the Cox family.

On Thursday, families streamed to Puyallup’s Woodbine Cemetery to remember the Powell boys and other children who died tragically and to dedicate a memorial: a bronze angel inspired by the novella The Christmas Box, in which strangers learn the value of love following a child’s death.

The novella's author, Richard Paul Evans, also attended the dedication. The memorial is on a hill overlooking the boys' gravesites 75 yards away.

"We get a lot of support from a lot of people and we're going to make it through," Cox says.

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Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

___

Johnson can be reached at https://twitter.com/GeneAPseattle

Read More..

Wall Street Week Ahead: "Cliff" worries may drive tax selling

NEW YORK (Reuters) - Investors typically sell stocks to cut their losses at year end. But worries about the "fiscal cliff" - and the possibility of higher taxes in 2013 - may act as the greatest incentive to sell both winners and losers by December 31.

The $600 billion of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-loss selling even more appealing than usual.

Tax-related selling may be behind the weaker trend in the shares of market leader Apple , analysts said. The stock is down 20 percent for the quarter, but it's still up nearly 32 percent for the year.

Apple dropped 8.9 percent in this past week alone. For a stock that gained more than 25 percent a year for four consecutive years, the embedded capital gains suddenly look like a selling opportunity if one's tax bill is going to jump sharply just because the calendar changes.

"Tax-loss selling is always a factor (but) tax-gains selling has been a factor this year," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"You have a lot of high-net-worth individuals in taxable accounts, and that could be what's affecting stocks like Apple. If you look at the stocks that people have their largest gains in, they seem to be under a little bit more pressure here than usual."

Of this year's top 20 performers in the S&P 1500 index, which includes large, small and mid-cap stocks, all but four have lost ground in the last five trading sessions.

The rush to avoid higher taxes on portfolio gains could cause additional weakness.

The S&P 500 ended the week up just 0.1 percent after another week of trading largely tied to fiscal cliff negotiation news, which has pushed the market in both directions.

A PAIN PILL FROM THE FED?

Next week's Federal Reserve meeting could offer some relief if policymakers announce further plans to help the lackluster U.S. economy. The Federal Open Market Committee will meet on Tuesday and Wednesday. The policy statement is expected at about 12:30 p.m. on Wednesday after the conclusion of the meeting - the Fed's last one for the year.

Friday's jobs report showing non-farm payrolls added 146,000 jobs in November eased worries that Superstorm Sandy had hit the labor market hard.

"After the FOMC meeting, I think it's going to be downhill from there as worries about the fiscal cliff really take center stage and prospects of a deal become less and less likely," said Mohannad Aama, managing director of Beam Capital Management LLC in New York.

"I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year," he said.

MORE VOLUME AND VOLATILITY

Volume could increase as investors try to shift positions before year end, some analysts said.

While most of that would be in stocks, some of the extra trading volume could spill over into options, said J.J. Kinahan, TD Ameritrade's chief derivatives strategist.

Volatility could pick up as well, and some of that is already being seen in Apple's stock.

"The actual volatility in Apple has been very high while the market itself has been calm. I expect Apple's volatility to carry over into the market volatility," said Enis Taner, global macro editor at RiskReversal.com, an options trading firm in New York.

Shares of Apple, the largest U.S. company by market value, registered their worst week since May 2010. In another bearish sign, the stock's 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38.

"There's a lot of tax-related selling happening now, and it will continue to happen. Apple is an example, even (though) there are other factors involved with Apple," Aama said.

While investors may be selling stocks to avoid higher taxes in 2013, companies may continue to announce special and accelerated dividend payments before year end. Among the latest, Expedia announced a special dividend of 52 cents a share to be paid on December 28.

To be sure, the big sell-off in stocks following the November 6 election was likely related to tax selling, making it hard to judge how much more is to come.

Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said there's a decent chance that the market could rally before year end.

"Even with little or spotty news that one would put in the positive bucket regarding the (cliff) negotiations, the market has basically hung in there, and I think it's hung in there in anticipation of something coming," he said.

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: caroline.valetkevitch(at)thomsonreuters.com)

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal; Multimedia versions of Reuters Top News are now available for:; 3000 Xtra: visit Reuters Top News; BridgeStation: view story .134; For London stock market outlook please click on .L/O; Pan-European stock market outlook .EU/O; Tokyo stock market outlook .T/O; Wall St Week Ahead runs every Friday.)

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