Changing of the Guard: Financial District Project in China Has Local Support


Sim Chi Yin for The New York Times


The Yujiapu financial district in Tianjin is a public works project that comprises at least 47 skyscrapers under construction on desolate coastal salt flats.







TIANJIN, China — China is full of big bets that the country’s breakneck economic growth will continue apace, but few are bigger than the vast Yujiapu financial district here.




Nicknamed China’s new Manhattan, the district comprises at least 47 skyscrapers being built on desolate coastal salt flats 100 miles southeast of Beijing. Financed by huge loans from state-owned banks, the district is an immense public works project, and is closely associated with Zhang Gaoli, the little-known Communist Party secretary of Tianjin who joined the new seven-member Politburo Standing Committee last week at the end of the 18th Party Congress.


Mr. Zhang has emerged as the man expected, after approval by the National People’s Congress in March, to handle day-to-day management of the Chinese economy. He won out over Wang Qishan, who has a much deeper background in economic and financial policy making and was seen as likely to clash with and perhaps even overshadow the incoming prime minister, Li Keqiang. Chinese leaders have not forgotten how Zhu Rongji, with a similarly deep background, managed to dominate economic policy making from his position as executive vice premier in the mid-1990s.


As the Yujiapu project makes clear, Mr. Zhang has been a defender of huge government-guided investments, an approach that very much fits the mold of ambitious party officials eager to get ahead within the existing power structure. At the same time, say experts and people who know him, he has cultivated an image as a stern bureaucratic taskmaster, a politician who can get things done by working with powerful business interests rather than challenging them.


“He’s a very strong guy,” said Jean-Luc Charles, the general manager of Airbus’s assembly plant here for the A320 jetliner, who had nothing but praise for Mr. Zhang. “He sets a target and people run.”


But Mr. Zhang also has some surprising characteristics. In Tianjin, he has pushed to expand retailing and other services as a way to create jobs beyond construction and manufacturing. He also is an advocate for firm environmental and labor standards aimed at improving the lives of ordinary Chinese.


After a series of increases during Mr. Zhang’s tenure, the city’s minimum wage is now 4 percent higher than Beijing’s — even though Tianjin is considerably poorer over all. And while Tianjin cracked down on labor protests in the summer of 2010, the municipal authorities have since set up a trade union for migrant workers, who usually have few legal protections.


The migrant workers’ union “negotiated a reasonable deal for sanitation workers in the city,” said Geoffrey Crothall, the spokesman for China Labor Bulletin, a nonprofit group in Hong Kong that favors the establishment of independent unions in China.


Tianjin residents described two street protests here in April, one against a $1.7 billion expansion project at a chemical plant and the other against a real estate developer who was accused of absconding with apartment buyers’ deposits. The authorities were quick to negotiate compromises in both cases, suspending construction at the chemical plant, even though it was being built by Sinopec, one of the largest state-owned enterprises, while tracking down the developer and requiring restitution. They did not resort to calling riot police to disperse the protesters, as municipal leaders have sometimes done elsewhere in China, residents said.


Tianjin has adopted many Western pollution regulations and in some cases tightened them further. Air and water emissions from the Airbus factory here are monitored by pollution equipment that is connected around the clock to government monitoring computers.


It is not clear, though, whether these policies reflect a personal commitment by Mr. Zhang to progressive social policies or his penchant for setting rules and making sure people follow them. Perhaps both.


“Zhang is very strong with all the regulations — do it in accordance with the regulations and no joke,” Mr. Charles said.


Mayor Huang Xingguo of Tianjin, the second-ranking official in this city of 13 million after Mr. Zhang, cited the city’s many parks and its air quality — though by some estimates it is only marginally better than Beijing’s — at a news conference in Beijing late last week during the party congress.


At the same time, he added a commercial note that captures the tone of the city’s administration: “We hope you come to Tianjin to buy houses.”


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Yahoo shares reach 18-month high as investors warm to new CEO
















SAN FRANCISCO (Reuters) – Yahoo Inc shares reached their highest level in a year and a half, as investor confidence grows that new Chief Executive Marissa Mayer can pull off a comeback that eluded three of her predecessors.


The Internet pioneer has yet to actually provide Wall Street with any hard evidence that its business is turning a corner – and she has warned that it will be a lengthy job – but investor faith in the ex-Google executive is running high.













Hedge funds Tiger Global Management and Greenlight Capital Management recently disclosed large stakes in Yahoo, accumulated during the third quarter.


“Money managers are staring to want to own this name again,” said Colin Gillis, an analyst with BGC Partners.


“For the amount of traffic they have, and the assets they have, they should be able to squeeze some value out of that,” Gillis said, referring to Yahoo. With Mayer at the helm, he said, Yahoo has “finally got somebody who the market believes can do that.”


Gravity Capital Management’s Adam Seessel said that Mayer’s recruitment of various Google Inc employees, including recently hired Yahoo Chief Operating Officer Henrique de Castro, has also helped burnish Yahoo‘s image.


“What the market is seeing is not (financial) numbers so much as they’re seeing people voting with their feet, people moving from Google to Yahoo,” said Seessel, whose firm owns Yahoo shares.


“All these people from Google wouldn’t be following her if they didn’t think that she didn’t have some good cards to play,” he said.


Shares of Yahoo finished Monday’s regular trading session up 2.8 percent at $ 18.36, amid a broad market rally. The last time Yahoo traded above $ 18.30 was in May 2011.


Yahoo ranks among the world’s most popular websites, with roughly 700 million monthly visitors. But the company’s revenue has eroded, amid competition from Google and Facebook and an industry-wide change in the online advertising market that has compressed prices for the online display ads that are key to its business.


The company has been rocked by internal turmoil: CEO Carol Bartz was fired over the phone and CEO Scott Thompson left after less than six months on the job due to questions about his academic credentials. Mayer, Google‘s first female engineer, took the top job at Yahoo in July.


In a conference call with investors last month, Mayer said that making Yahoo‘s online products more smartphone-friendly was her top priority.


Investors and analysts on Monday dismissed a weekend report in The Telegraph that said Yahoo was in discussions with Facebook about a search deal, particularly after Facebook issued a statement denying any such talks.


“People expect a better search experience on Facebook. We are working on improvements to better meet those expectations but are not in talks to enter into a new search partnership,” Facebook said in a statement on Monday.


Still, analysts say that search represents one of the key opportunities that Mayer will focus on as she moves to revive Yahoo‘s fortunes. A 2010 deal struck by former CEO Bartz outsourced the back-end technology of Yahoo‘s search to Microsoft Corp, but deal has failed to deliver an expected boost to Yahoo‘s search advertising revenue.


“Certainly search could be resuscitated,” said Gabelli & Company analyst Brett Harriss, who said Yahoo should be worth $ 26 a share based on a six-times multiple of its earnings before interest, taxes, depreciation and amortization.


“It was a disaster for a year and a half,” said Harris. “Everybody hated the board, you had a while of transition where you went through three or four CEOs quickly.”


Now, he said, there’s finally a CEO “that investors can believe in.”


(Reporting By Alexei Oreskovic; Editing by Steve Orlofsky)


Tech News Headlines – Yahoo! News



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Justin Bieber Brings His Mom to the American Music Awards















11/18/2012 at 09:35 PM EST







Pattie Mallette and Justin Bieber


Jonathan Alcorn/Reuters/Landov


Mother knows best!

Despite his recent split from Selena Gomez, Justin Bieber still had a date for the 40th American Music Awards on Sunday: his mother, Pattie Mallette.

Malette – who recently penned Nowhere But Up: The Story of Justin Bieber's Mom – looked thrilled to pose for photographs with her son.

When Bieber won the first award of the night, for favorite pop/rock male artist, his proud mother, 38, beamed.

"I want to say this is for all the haters who thought I was just here for one or two years. I feel like I'm going to be here for a very long time," the singer said as he accepted the award.

The award was a highlight during a rocky week for Bieber, who on Friday reunited with Gomez, 20, for dinner at a Japanese restaurant in Los Angeles. But just five minutes after entering the restaurant, the couple emerged with Gomez looking visibly "mad," says a source.

Later that night, Bieber Tweeted "Things aren't always easy. there is a lot of pressure. im figuring it all out. im trying. but i care, i notice, i still hear u. #Beliebers."

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EU drug regulator OKs Novartis' meningitis B shot

LONDON (AP) — Europe's top drug regulator has recommended approval for the first vaccine against meningitis B, made by Novartis AG.

There are five types of bacterial meningitis. While vaccines exist to protect against the other four, none has previously been licensed for type B meningitis. In Europe, type B is the most common, causing 3,000 to 5,000 cases every year.

Meningitis mainly affects infants and children. It kills about 8 percent of patients and leaves others with lifelong consequences such as brain damage.

In a statement on Friday, Andrin Oswald of Novartis said he is "proud of the major advance" the company has made in developing its vaccine Bexsero. It is aimed at children over two months of age, and Novartis is hoping countries will include the shot among the routine ones for childhood diseases such as measles.

Novartis said the immunization has had side effects such as fever and redness at the injection site.

Recommendations from the European Medicines Agency are usually adopted by the European Commission. Novartis also is seeking to test the vaccine in the U.S.

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Asian shares rise on positive U.S. tone, yen slips

TOKYO (Reuters) - Asian shares rose on Monday, boosted by a positive tone in U.S. equities last week, while the yen fell to a near seven-month low against the dollar on expectations a new government after next month's election in Japan may deliver more stimulus.


MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> rose 0.6 percent, recovering from Friday's nine-week low.


Its energy sector <.miapjen00pus> outperformed as mounting supply concerns on escalating tension from Israeli air strikes on the Gaza Strip and Hamas rocket attacks on Israel underpinned oil prices.


The material sector <.miapjmt00pus> also were among top gainers as London copper rallied 1 percent to $7.684 a tonne on expectations for economic measures in China and hopes for a solution to the U.S. fiscal crisis.


Australian shares <.axjo> inched up 0.2 percent but Shanghai shares <.ssec> underperformed with a 0.3 percent drop, hovering near the seven-week low touched on Friday.


"We had some positive leads from the U.S. on Friday. Our market had been underperforming last week," Peter Esho, chief market analyst at City Index, said of Australian equities. "There's some hope that the negotiations in the U.S. around the fiscal situation may somewhat improve -- the prospects around that may improve this week."


Japan's Nikkei average <.n225>, which bucked the broad Asian downtrend on Friday and surged 2.2 percent, extended gains with a 1.3 percent climb to a two-month high. <.t/>


Speculation that the leader of the opposition Liberal Democratic Party, which is expected to win the December 16 elections, will call for more stimulus including further aggressive easing by the Bank of Japan also undermined the yen.


The BOJ begins a two-day policy meeting on Monday, and is expected to refrain from taking fresh policy steps.


The dollar hit a near seven-month high against the yen at 81.59 yen on Monday. A weaker yen helps support the economy and boosts sentiment for Japanese equities investors.


A senior trader at a foreign bank said investors had been underweight Japanese equities and the rally could have further to go as they start to put their money into Japan, advising investors to cover their positions in very heavily short-sold sectors such as electronics.


FISCAL CLIFF, GREECE EYED


Aside from Japanese politics, market players closely watched negotiations among U.S. Congressional leaders to avoid a budget crisis, and prepared for European officials' meeting on Tuesday to discuss aid for debt-stricken Greece.


Hope that U.S. politicians would find common ground to steer clear of the "fiscal cliff" boosted U.S. stocks on Friday. European shares sank to a 3-1/2-month closing low, for their worst week since the end of May, on persistent concerns over U.S. fiscal policy and the euro zone debt crisis.


U.S. Treasury yields fell to their lowest levels in over two months on Friday as skepticism over the U.S. budget talks drew safe-haven bids.


Top lawmakers from both major U.S. political parties on Friday hinted at the possibility of a budget compromise that involves spending cuts and additional revenue, although they were short on details.


"The good news is the tone of Friday's White House meeting but the prospect of no agreement until at least mid-December fits our view that the two sides are starting negotiations from rather distant points," Sean Callow, senior currency strategist at Westpac bank in Sydney, said in a note.


"As such, there will be plenty of negative headlines in coming weeks that weigh on Treasury yields and boost USD, which is yet again trading like a safe haven even when the bad news is generated by the US."


The dollar fell 0.3 percent, retreating from a two-month high of 81.455 hit on Friday against a basket of key currencies <.dxy>. The drop in the dollar supported gold, which added 0.5 percent to $1,722.39 an ounce.


The euro rose 0.3 percent to $1.2772, with traders waiting to know whether euro zone finance ministers and International Monetary Fund's Managing Director Christine Lagarde would agree on how to make Greece's debt manageable.


"As the EU prepares a bundled aid package to avert a Greek default, headlines coming out of the meeting may fuel a relief rally in the euro, but we will maintain our bearish forecast for the single currency as the region faces a deepening recession," said David Song, currency analyst at DailyFX.


U.S. crude futures rose 0.8 percent to 87.57 a barrel and Brent rose 0.6 percent to $109.59.


Asian credit market spreads on the iTraxx Asia ex-Japan investment-grade index were little changed.


(Additional reporting by Thuy Ong and; Ian Chua in Sydney, Dominic Lau in Tokyo; Editing by Eric Meijer)


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Gaza Clash Escalates With Deadliest Israeli Strike


Bernat Armangue/Associated Press


Smoke rose over Gaza City on Sunday, as Israel widened its range of targets to include buildings used by the news media.







CAIRO — Emboldened by the rising power of Islamists around the region, the Palestinian militant group Hamas demanded new Israeli concessions to its security and autonomy before it halts its rocket attacks on Israel, even as the conflict took an increasing toll on Sunday.




After five days of punishing Israeli airstrikes on the Hamas-controlled Gaza Strip and no letup in the rocket fire in return, representatives of Israel and Hamas met separately with Egyptian officials in Cairo on Sunday for indirect talks about a truce.


The talks came as an Israeli bomb struck a house in Gaza on Sunday afternoon, killing 11 people, in the deadliest single strike since the conflict between Israel and Hamas escalated on Wednesday. The strike, along with several others that killed civilians across the Gaza Strip, signaled that Israel was broadening its range of targets on the fifth day of the campaign.


By the end of the day, Gaza health officials reported that 70 Palestinians had been killed in airstrikes since Wednesday, including 20 children, and that 600 had been wounded. Three Israelis have been killed and at least 79 wounded by unrelenting rocket fire out of Gaza into southern Israel and as far north as Tel Aviv.


Hamas, badly outgunned on the battlefield, appeared to be trying to exploit its increased political clout with its ideological allies in Egypt’s new Islamist-led government. The group’s leaders, rejecting Israel’s call for an immediate end to the rocket attacks, have instead laid down sweeping demands that would put Hamas in a stronger position than when the conflict began: an end to Israel’s five-year-old embargo of the Gaza Strip, a pledge by Israel not to attack again and multinational guarantees that Israel would abide by its commitments.


Prime Minister Benjamin Netanyahu of Israel stuck to his demand that all rocket fire cease before the air campaign lets up, and Israeli tanks and troops remained lined up outside Gaza on Sunday. Tens of thousands of reserve troops had been called up. “The army is prepared to significantly expand the operation,” Mr. Netanyahu said at the start of a cabinet meeting.


Reda Fahmy, a member of Egypt’s upper house of Parliament and of the nation’s dominant Islamist party, who is following the talks, said Hamas’s position was just as unequivocal. “Hamas has one clear and specific demand: for the siege to be completely lifted from Gaza,” he said. “It’s not reasonable that every now and then Israel decides to level Gaza to the ground, and then we decide to sit down and talk about it after it is done. On the Israeli part, they want to stop the missiles from one side. How is that?”


He added: “If they stop the aircraft from shooting, Hamas will then stop its missiles. But violence couldn’t be stopped from one side.”


Hamas’s aggressive stance in the cease-fire talks is the first test of the group’s belief that the Arab Spring and the rise in Islamist influence around the region have strengthened its political hand, both against Israel and against Hamas’s Palestinian rivals, who now control the West Bank with Western backing.


It also puts intense new pressure on President Mohamed Morsi of Egypt, a former leader of the Muslim Brotherhood who was known for his fiery speeches defending Hamas and denouncing Israel. Mr. Morsi must now balance the conflicting demands of an Egyptian public that is deeply sympathetic to Hamas and the Palestinian cause against Western pleadings to help broker a peace and Egypt’s need for regional stability to help revive its moribund economy.


Indeed, the Egyptian-led cease-fire talks illustrate the diverging paths of the Muslim Brotherhood and Hamas, a Palestinian offshoot of the original Egyptian Islamist group. Hamas has evolved into a more militant insurgency and is labeled a terrorist organization by the United States and Israel, while the Brotherhood has effectively become Egypt’s ruling party. Mr. Fahmy said in an interview in March that the Brotherhood’s new responsibilities required a step back from its ideological cousins in Hamas, and even a new push to persuade the group to compromise.


Reporting was contributed by Ethan Bronner, Irit Pazner Garshowitz and Isabel Kershner from Jerusalem, and Peter Baker from Bangkok.



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Shirtless photo a “joke,” says FBI agent who began Petraeus inquiry
















WASHINGTON/NEW YORK (Reuters) – The FBI agent who began the investigation that led David Petraeus to resign as CIA director said that a shirtless photo he sent to a woman at the center of the probe was a “joke” sent to many friends, and was not meant to be sexual.


Frederick Humphries told the Seattle Times in an interview published Thursday that the photo in the unfolding adultery scandal that brought down Petraeus was sent to Tampa, Florida, socialite Jill Kelley in 2010.













Humphries, who has been identified in media reports on the scandal mainly as the “shirtless” FBI agent, was a “top-notch” operative, according to a prosecutor who worked with him on the “millennium bomber” case years ago.


Andrew Hamilton, now a senior deputy prosecutor for King County, Washington, said Humphries was assigned to the case partly because he spoke excellent French. Ahmed Ressam, who was convicted of plotting to bomb the Los Angeles International Airport on New Year’s Eve 1999, claimed to be from Quebec and spoke French.


“That’s the first time I met him, as a case agent,” Hamilton told Reuters. “We spent a lot of time together over the next couple years getting ready for trial, and I couldn’t have asked for more as a case agent. He was very, very thorough, and very honest. We always thought we were very lucky to have him.”


Five months ago, Kelley ignited the FBI investigation that led to Petraeus when she asked Humphries whether the bureau could look into harassing emails she had been receiving.


The investigation eventually revealed that the emails to Kelley were sent by Paula Broadwell, an Army reserve officer in military intelligence and co-author of a biography of Petraeus.


The FBI investigation revealed Broadwell’s affair with Petraeus, who cited the relationship when he resigned as CIA chief last week. The probe also ensnared General John Allen, the commander of NATO forces in Afghanistan, whom agents found had exchanged “flirtatious” emails with Kelley, law enforcement officials said.


(Editing by David Lindsey and Jim Loney)


Internet News Headlines – Yahoo! News



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Taylor Swift and One Direction's Harry Styles: Are They Dating?















11/17/2012 at 10:40 PM EST







Taylor Swift and Harry Styles


Janet Mayer/Splash News Online; Don Arnold/Wireimage


Taylor Swift appears to be taking her love life in a new direction.

The "Never Ever Getting Back Together" singer is seemingly taking her lyrics to heart as she moves on from recent ex, Conor Kennedy, and enjoys the company of One Direction hottie Harry Styles.

"I had to literally do a double-take," an onlooker tells PEOPLE of finding Styles, 18, with Swift, 22, on the set of The X Factor Thursday morning.

Styles was on hand to watch Swift rehearse the debut of "State of Grace," which she performed later that night on the Fox reality show.

"He was smiling at her while she rehearsed. When she was done he jumped up on stage, picked her up, put her over his shoulder and carried her off stage," the onlooker says. "The whole crew was really surprised."

The young singers were also spotted by X Factor host Mario Lopez, who says he was slapped on the back by Styles during Swift's rehearsal.

"I said, 'What are you doing here,' " Lopez said on his 104.3 MY FM radio show Friday. "And he sort of [pointed] toward Taylor."

Lopez went on to say he later saw the two "hand-in-hand."

A telling sign of the budding relationship may have been a look Styles shared with his bandmate Niall Horan a week earlier after Horan told PEOPLE his favorite song of 2012 was Swift's "Never Ever Getting Back Together."

When asked if he would ever date Swift, Horan gave a small laugh, looked at Styles and answered with a succinct, "no."

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EU drug regulator OKs Novartis' meningitis B shot

LONDON (AP) — Europe's top drug regulator has recommended approval for the first vaccine against meningitis B, made by Novartis AG.

There are five types of bacterial meningitis. While vaccines exist to protect against the other four, none has previously been licensed for type B meningitis. In Europe, type B is the most common, causing 3,000 to 5,000 cases every year.

Meningitis mainly affects infants and children. It kills about 8 percent of patients and leaves others with lifelong consequences such as brain damage.

In a statement on Friday, Andrin Oswald of Novartis said he is "proud of the major advance" the company has made in developing its vaccine Bexsero. It is aimed at children over two months of age, and Novartis is hoping countries will include the shot among the routine ones for childhood diseases such as measles.

Novartis said the immunization has had side effects such as fever and redness at the injection site.

Recommendations from the European Medicines Agency are usually adopted by the European Commission. Novartis also is seeking to test the vaccine in the U.S.

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Wall Street Week Ahead: Going off "cliff" with a bungee cord

NEW YORK (Reuters) - The 1987 crash. The Y2K bug. The debt ceiling debacle of 2011.


All these events, in the end, turned out to be buying opportunities for stocks. So will the "fiscal cliff," some investors say as they watch favorite stocks tumble during the political give-and-take happening in Washington.


The first round of talks aimed at avoiding the "fiscal cliff" caused a temporary rise in equities on Friday, signaling Wall Street's recent declines could be a buying opportunity. The gains were small and sentiment remains weak, but it suggests hope for market bulls.


Though shares ended moderately higher on Friday, it was not enough to offset losses for the week. The S&P was down 1.5 percent, while both the Dow and the Nasdaq fell 1.8 percent.


The S&P 500 is down more than 5 percent in the seven sessions that followed President Barack Obama's re-election. Uncertainty arose as attention turned to Washington's task of dealing with mandated tax hikes and spending cuts that could take the U.S. economy back into recession.


Some see the market's move as an overreaction to hyperbolic headlines about policy gridlock in Washington, believing stocks may start to rebound in what should be a quiet few days ahead of the Thanksgiving holiday next Thursday.


"It just doesn't seem to make any sense that you suddenly wake up the day after the election and realize we've got a fiscal cliff," said Krishna Kumar, partner at New York hedge fund Goose Hollow Alpha Advisors.


Not long ago the S&P was on target for its second-best year in the last 10, riding a 17 percent advance in 2012. That's been halved to about 8 percent, which isn't bad but disappointing compared with just a month ago.


Investors have been selling the year's winners. Apple is down 25 percent from its peak above $700. General Electric is down 14 percent; Google has lost 16 percent. Overall, the stocks that make up the top 10 percent of performers in the month prior to Election Day have been the worst performers since, according to Bespoke Investment Group of Harrison, New York.


"I think it's a good opportunity to be long stocks at these levels," said Kumar.


Hikes on capital gains and dividend taxes are on the line, and Obama has dug in his heels on what he sees as a mandate to make the tax code more progressive.


He seems to have the upper hand in dealings with Congress because Republican lawmakers don't want to see tax rates increase, which is what will happen if no solution is found by the beginning of 2013. Republicans don't want to take the blame for driving the economy over the cliff.


The current crisis is similar to last year's fight to raise the U.S. debt ceiling, which led to the downgrade of the United States' top credit rating in early August 2011.


During the dealings, the S&P 500 lost 18.8 percent between its peak in July 2011 and its bottom in August. As the market slid, the political standoff badly hurt investors' confidence in Washington, setting off a spike in volatility.


In the end a deal was announced that raised the ceiling and put off longer-term fiscal decisions until January 1, 2013, setting the stage for today's "fiscal cliff" crisis.


After staying flat through September 2011, the S&P 500 jumped 31 percent between its October low and the end of March.


BUY THE DIP?


Gridlock in Washington and all that could possibly go wrong with the economy if a deal is not reached have grabbed the headlines, but the negotiations leave room for stock market gains. Congressional leaders said Friday they will work through the Thanksgiving holiday recess to find a solution.


"The debate over how to solve (the fiscal cliff) may be more productive than is commonly recognized," said Brad Lipsig, senior portfolio manager at UBS Financial Services in New York.


"The U.S. is facing a major debt overhang, and serious steps toward addressing it might ultimately be viewed as a positive for future growth," he said. "The market may recognize this and, after a time of hand wringing, recover from the concerns with a renewed sense of optimism."


The recent selling took the S&P 500's relative strength index - a technical measure of internal strength - below 30 this week, indicating the benchmark is oversold and due for a rebound.


The RSI in four of the 10 S&P sectors - utilities, telecoms, consumer staples and technology - is below 30 and the highest RSI reading, for the consumer discretionary sector, is below 40, suggesting a bounce is in store.


"What I want to do is what we did during the decline following the budget negotiations in the summer of 2011: The lower the stock market goes, the more I want to own stock," said Brian Reynolds, chief market strategist at New York-based Rosenblatt Securities.


"If we go off the cliff it will be with a bungee cord attached," he said.


KEEP CALM AND HEDGE


Volatility is expected to rise through the end of November and to spike in late December if no agreement on the fiscal cliff is reached in Congress. Alongside comes opportunity for those with high risk tolerance.


"Recently, volatility has increased in the market overall. You can't really pick it up in the VIX yet, but I think as we get through November, I think you're likely to see the VIX be at a relatively higher level," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.


In 2011, the VIX averaged 19.2 in July and 35 in August. So far this month the average is 17.8 and it is expected to spike if negotiations on the cliff drag into late next month.


"Looking at the range of possibilities, I would say any of them would be better than sitting here waiting. I would even put going off the fiscal cliff in that category," said Jill Cuniff, president of Seattle-based Edge Asset Management Inc, which manages about $20 billion.


"But we don't believe Congress will let that happen; there's going to be some middle ground here."


(Reporting by Rodrigo Campos and Jonathan Spincer, additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)


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