Wall Street gets small lift from technology and McDonald's

NEW YORK (Reuters) - Stocks edged higher on Monday as technology shares bounced back after recent weakness and McDonald's posted strong monthly sales.

Technology stocks were led by Hewlett-Packard Co , which climbed 2.6 percent to $14.16 on rumors that activist investor Carl Icahn is building a stake in the PC maker. The stock is down 44.5 percent for the year and ranks as the Dow's worst performer. The S&P technology index <.gspt> was up 0.3 percent.

Tech also was supported by Cisco Systems , which gained 2.4 percent to $19.79 after the company presented its midterm growth strategy on Friday.

McDonald's Corp gave the Dow a jolt, gaining 1.1 percent to $89.41, as its November sales were stronger than expected and showed a bounce back from a decline in October.

There was little news Monday about the negotiations over the "fiscal cliff," a series of automatic tax hikes and spending cuts that could hurt economic growth next year. Concerns that lawmakers will not broker a deal have kept a lid on optimism in the equity market.

"There is a general sense that if a deal is struck, that we could have a further advance in the market at the end of this year as well as the first part of next year," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

A breakout to the upside on a cliff deal could take the S&P 500 back up to 1,474, just off the 2012 high for the index, said Elliot Spar, Stifel Nicolaus option market strategist in Shrewsbury, New Jersey.

The benchmark S&P 500 index has yet to see a move greater than 0.5 percent in either direction on any day in December, and hasn't moved more than 1 percent either way in any session since November 23. However, the market has regained most of the losses incurred post-election as investors refocused on the fiscal cliff.

U.S. President Barack Obama met with Republican House Speaker John Boehner on Sunday to negotiate a budget deal. A Boehner aide said Monday that talks are continuing.

The Dow Jones industrial average <.dji> rose 14.75 points, or 0.11 percent, to 13,169.88 at the close. The Standard & Poor's 500 Index <.spx> inched up just 0.48 of a point, or 0.03 percent, to 1,418.55. The Nasdaq Composite Index <.ixic> advanced 8.92 points, or 0.30 percent, to close at 2,986.96.

News out of Italy kept sentiment in check as Prime Minister Mario Monti said he would resign after the approval of the 2013 budget. The move added to uncertainty about progress being made to tackle the euro zone's debt problem and drove Italy's borrowing costs higher.

U.S.-listed shares of Nexen jumped 13.8 percent to $26.77 and the stock was the second-most actively traded on the New York Stock Exchange. On Friday, Canada approved a $15.1 billion bid by CNOOC Ltd for energy company Nexen.

The S&P materials index <.gspm> gained 0.7 percent and led the S&P 500's sector index gains as shares of mining companies rose in sync with copper and gold prices. Shares of Freeport-McMoRan gained 1.1 percent to $32.04.

Volume was roughly 5.3 billion shares traded on the NYSE, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of roughly 6.5 billion.

Advancers outnumbered decliners on the NYSE by a ratio of about 17 to 13, while on the Nasdaq, seven stocks rose for every five that fell.

(Reporting by Caroline Valetkevitch; Additional reporting by Doris Frankel in Chicago and Gabriel Debenedetti in New York; Editing by Jan Paschal)

Read More..

Egypt army given temporary power to arrest civilians

CAIRO (Reuters) - Egypt's Islamist president has given the army temporary power to arrest civilians during a constitutional referendum he is determined to push through despite the risk of bloodshed between his supporters and opponents accusing him of a power grab.

Seven people were killed and hundreds wounded last week in clashes between the Islamist Muslim Brotherhood and their critics besieging Mohamed Mursi's graffiti-daubed presidential palace. Both sides plan mass rallies on Tuesday.

The elite Republican Guard has yet to use force to keep protesters away from the palace, which it ringed with tanks, barbed wire and concrete barricades after last week's violence.

Mursi, bruised by calls for his downfall, has rescinded a November 22 decree giving him wide powers but is going ahead with a referendum on Saturday on a constitution seen by his supporters as a triumph for democracy and by many liberals as a betrayal.

A decree issued by Mursi late on Sunday gives the armed forces the power to arrest civilians and refer them to prosecutors until the announcement of the results of the referendum, which the protesters want cancelled.

Despite its limited nature, the edict will revive memories of Hosni Mubarak's emergency law, also introduced as a temporary expedient, under which military or state security courts tried thousands of political dissidents and Islamist militants.

But a military source stressed that the measure introduced by a civilian government would have a short shelf-life.

"The latest law giving the armed forces the right to arrest anyone involved in illegal actions such as burning buildings or damaging public sites is to ensure security during the referendum only," the military source said.

Presidential spokesman Yasser Ali said the committee overseeing the vote had requested the army's assistance.

"The armed forces will work within a legal framework to secure the referendum and will return (to barracks) as soon as the referendum is over," Ali said.

Protests and violence have racked Egypt since Mursi decreed himself extraordinary powers he said were needed to speed up a troubled transition since Mubarak's fall 22 months ago.

The Muslim Brotherhood has voiced anger at the Interior Ministry's failure to prevent protesters setting fire to its headquarters in Cairo and 28 of its offices elsewhere.

Critics say the draft law puts Egypt in a religious straitjacket. Whatever the outcome of the referendum, the crisis has polarized the country and presages more instability at a time when Mursi is trying to steady a fragile economy.

On Monday, he suspended planned tax increases only hours after the measures had been formally decreed, casting doubts on the government's ability to push through tough economic reforms that form part of a proposed $4.8 billion IMF loan agreement.

"VIOLENT CONFRONTATION"

Rejecting the referendum plan, opposition groups have called for mass protests on Tuesday, saying Mursi's eagerness to push the constitution through could lead to "violent confrontation".

Islamists have urged their followers to turn out "in millions" the same day in a show of support for the president and for a referendum they feel sure of winning with their loyal base and perhaps with the votes of Egyptians weary of turmoil.

The opposition National Salvation Front, led by liberals such as Mohamed ElBaradei and Amr Moussa, as well as leftist firebrand Hamdeen Sabahy, has yet to call directly for a boycott of the referendum or to urge their supporters to vote "no".

Instead it is contesting the legitimacy of the vote and of the whole process by which the constitution was drafted in an Islamist-led assembly from which their representatives withdrew.

The opposition says the document fails to embrace the diversity of 83 million Egyptians, a tenth of whom are Christians, and invites Muslim clerics to influence lawmaking.

But debate over the details has largely given way to noisy street protests and megaphone politics, keeping Egypt off balance and ill-equipped to deal with a looming economic crisis.

"Inevitability of referendum deepens divisions," was the headline in Al-Gomhuriya newspaper on Monday. Al Ahram daily wrote: "Political forces split over referendum and new decree."

Mursi issued another decree on Saturday to supersede his November 22 measure putting his own decisions beyond legal challenge until a new constitution and parliament are in place.

While he gave up extra powers as a sop to his opponents, the decisions already taken under them, such as the dismissal of a prosecutor-general appointed by Mubarak, remain intact.

"UNWELCOME" CHOICE

Lamia Kamel, a spokeswoman for former Arab League chief Moussa, said the opposition factions were still discussing whether to boycott the referendum or call for a "no" vote.

"Both paths are unwelcome because they really don't want the referendum at all," she said, but predicted a clearer opposition line if the plebiscite went ahead as planned.

A spokeswoman for ElBaradei, former head of the U.N. nuclear watchdog, said: "We do not acknowledge the referendum. The aim is to change the decision and postpone it."

Mahmoud Ghozlan, the Muslim Brotherhood's spokesman, said the opposition could stage protests, but should keep the peace.

"They are free to boycott, participate or say no, they can do what they want. The important thing is that it remains in a peaceful context to preserve the country's safety and security."

The army stepped into the conflict on Saturday, telling all sides to resolve their disputes via dialogue and warning that it would not allow Egypt to enter a "dark tunnel".

A military source said the declaration read on state media did not herald a move by the army to retake control of Egypt, which it relinquished in June after managing the transition from Mubarak's 30 years of military-backed one-man rule.

The draft constitution sets up a national defense council, in which generals will form a majority, and gives civilians some scrutiny over the army - although not enough for critics.

In August Mursi stripped the generals of sweeping powers they had grabbed when he was elected two months earlier, but has since repeatedly paid tribute to the military in public.

So far the army and police have taken a relatively passive role in the protests roiling the most populous Arab nation.

(Additional reporting by Edmund Blair and Yasmine Saleh; editing by Philippa Fletcher)

Read More..

New leaks suggest Microsoft Office for iOS could launch soon

Read More..

PHOTOS: Remembering Jenni Rivera

Moments before her fatal flight, Mexican American superstar Jenni Rivera shared a smile from inside the Leer jet that crashed Dec. 9, outside Monterrey. The shot was taken by her makeup artist, Jacob Llenares, who also perished, and shared on Instagram.

Read More..

Surprise: New insurance fee in health overhaul law

WASHINGTON (AP) — Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's health care overhaul.

The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.

Employee benefits lawyer Chantel Sheaks calls it a "sleeper issue" with significant financial consequences, particularly for large employers.

"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.

Based on figures provided in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.

The Obama administration says it is a temporary assessment levied for three years starting in 2014, designed to raise $25 billion. It starts at $63 and then declines.

Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.

The program "is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all," the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to "contributions" without detailing the total cost and scope of the program.

Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.

The $25 billion fee is part of a bigger package of taxes and fees to finance Obama's expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.

But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don't provide coverage.

"This kind of came out of the blue and was a surprisingly large amount," said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.

Word started getting out in the spring, said Young, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.

America's Health Insurance Plans, the major industry trade group for health insurers, says the fund is an important program that will help stabilize the market and mitigate cost increases for consumers as the changes in Obama's law take effect.

But employers already offering coverage to their workers don't see why they have to pony up for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.

"It just adds on to everything else that is expected to increase health care costs," said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.

The fee will be assessed on all "major medical" insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That's because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.

The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.

It will phase out completely in 2017 — unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits — decides to extend it.

Read More..

Wall St 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-related 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 the 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?

This 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. EST 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, on Friday 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.

If tax rates are going up, an investor would sell now to book gains and pay lower capital gains taxes, according to Aama. But if an investor has capital losses, then "you take losses and have them count against capital gains or regular income if you do not have any offsetting capital gains.

"In essence, higher capital gains tax rates will give your losses a higher value next year than this year as the income tax shield will be worth more in 2013. So if you have no capital gains this year, you are better off holding off on selling your losers in 2012 and waiting till 2013," he said in an email.

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.

Even with stocks' recent declines, the three major U.S. stock indexes are still up for the year. The Dow Jones industrial average <.dji> is up 7.7 percent for 2012 so far, while the benchmark Standard & Poor's 500 index <.spx> is up 12.8 percent and the Nasdaq Composite Index <.ixic> is up 14.3 percent for the year to date.

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

"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 Sunday. 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>; Pan-European stock market outlook <.eu>; Tokyo stock market outlook <.t>)

Read More..

Egypt's opposition rejects constitutional referendum

CAIRO (Reuters) - Egypt's main opposition coalition rejected on Sunday Islamist President Mohamed Mursi's plan for a constitutional referendum this week, saying it risked dragging the country into "violent confrontation".

Mursi's decision on Saturday to retract a decree awarding himself wide powers failed to placate opponents who accused him of plunging Egypt deeper into crisis by refusing to postpone the vote on a constitution shaped by Islamists.

"We are against this process from start to finish," Hussein Abdel Ghani, spokesman of the National Salvation Front, told a news conference, calling for more street protests on Tuesday.

The Front's main leaders - Nobel peace laureate Mohamed ElBaradei, former Foreign Minister Amr Moussa and leftist Hamdeen Sabahy - did not attend the event.

Hundreds of protesters milled around Mursi's palace, despite tanks, barbed wire and other barriers installed last week after clashes between Islamists and their rivals killed seven people.

"Holding a referendum now in the absence of security reflects haste and an absence of a sense of responsibility on the part of the regime, which risks pushing the country towards violent confrontation," a statement from the Front said.

The Muslim Brotherhood, which propelled Mursi from obscurity to power, urged the opposition to accept the referendum's verdict.

Islamists say the vote will seal a democratic transition that began when a popular uprising toppled Hosni Mubarak 22 months ago after three decades of military-backed one-man rule.

Their liberal, leftist and Christian adversaries say the document being fast-tracked through could threaten freedoms and fails to embrace the diversity of Egypt's 83 million people.

"ACT OF WAR"

Mursi had given some ground on Saturday when he annulled the fiercely contested decree issued on November 22 that gave him extra powers and shielded his decisions from judicial review.

But some measures taken under the decree remain in force and the president has insisted the referendum go ahead on December 15.

Liberal opposition leader Ahmed Said earlier described the race to a referendum as an "act of war" against Egyptians.

Egypt is torn 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 Egyptians just crave stability and economic recovery.

Brotherhood spokesman Mahmoud Ghozlan said the scrapping of Mursi's decree had removed any reason for controversy.

"We ask others to announce their acceptance of the referendum result," he said on the group's Facebook page, asking whether the opposition would accept "the basics of democracy".

The cancellation of Mursi's decree, announced after a "national dialogue" on Saturday boycotted by almost all the president's critics, has not bridged a deep political divide.

Prime Minister Hisham Kandil, a technocrat with Islamist leanings, said the referendum was the best test of opinion.

"The people are the makers of the future as long as they have the freedom to resort to the ballot box in a democratic, free and fair vote," he said in a cabinet statement.

But opposition factions, uncertain of their ability to vote down the constitution against the Islamists' organizational muscle, want the document redrafted before any vote.

"A constitution without consensus can't go to a referendum," said Hermes Fawzi, 28, a protester outside the palace. "It's not logical that just one part of society makes the constitution."

DIALOGUE

Egypt tipped into turmoil after Mursi grabbed powers to stop any court action aimed at hindering the transition. An assembly led by the Brotherhood and other Islamists then swiftly approved the constitution it had spent six months drafting.

Opponents, including minority Christians, had already quit the assembly in dismay, saying their voices were being ignored.

After the dialogue hosted by Mursi, a spokesman announced that the president had issued a new decree whose first article "cancels the constitutional declaration" of November 22. He said the referendum could not be delayed for legal reasons.

The decree ignited more than two weeks of sometimes violent protests and counter-rallies in Egypt. Mursi's foes have chanted for his downfall. Islamists fear a plot to oust the most populous Arab nation's first freely-elected leader.

Islamists reckon they can win the referendum and, once the new constitution is in place, a parliamentary election about two months later. The Islamist-led lower house elected this year was dissolved after a few months by a court order.

Investors appeared relieved after Mursi rescinded his decree, sending Egyptian stocks 4.4 percent higher on Sunday. Markets are awaiting approval of a $4.8 billion IMF loan later this month designed to support the budget and economic reforms.

The military, which led Egypt's transition for 16 turbulent months after Mubarak fell, told feuding factions on Saturday that only dialogue could avert "catastrophe". But a military source said these remarks did not herald an army takeover.

(Additional reporting by Edmund Blair and Yasmine Saleh; editing by David Stamp)

Read More..

Top 10 Tech This Week

1. Here Comes the First Real Alternative to iPhone and Android

Jolla, a Finnish startup, launched a new mobile OS called Sailfish, which the company believes will become a legitimate alternative to the Coke and Pepsi of smartphone platforms: Apple’s iOS and Google’s Android. Learn more about the new OS.

Click here to view this gallery.

[More from Mashable: Jimmy Fallon and Mariah Carey Take on ‘All I Want For Christmas Is You’]

It’s been awhile since the big tech companies launched products in time for the holiday shopping season. So this week, tech news has mostly been filled with cool scientific developments and — of course — drones.

We learned about Swiss researchers who created an underwater drone that resembles a sea turtle, and a father who built a DIY drone to track his kid walking from home to the bus each morning.

[More from Mashable: News Corp. Kills ‘The Daily’]

This week, we also took a look at new innovations: One groups of scientists created the lightbulb of the future, and another team built the largest-ever model of a functioning brain.

There was also plenty of mobile news. Read up on a new Finnish mobile OS that aims to be the alternative to iOS and Android, and about a Casio watch that syncs with your iPhone.

For these stories and more, check out this week’s Top 10 Tech gallery, above.

This story originally published on Mashable here.

Wireless News Headlines – Yahoo! News

Read More..

See the Well-Dressed Star Everyone Is Talking About This Week

Stylewatch
Style News Now

12/08/2012 at 12:00 PM ET

JIMI CELESTE/patrickmcmullan.com/Sipa

The red carpet saw its fair share of sequins, metallics and lace, but all of that sparkle and sexiness was no match for Katie Holmes‘s basic LBD.

Her knee-length number earned more than 15,700 votes and nabbed the top spot on our best dressed list.

Holmes wore the winning creation — which features flutter-sleeves and V-neckline — with two-tone Gio Diev pumps (love!) to a Quentin Tarantino tribute at N.Y.C.’s MoMA on Monday.

PHOTOS: SEE THE TOP 10 BEST DRESSED STARS ON PEOPLE THIS WEEK! 

Close behind Holmes in the number two spot was Taylor Swift, who’s actually found herself in two of the top five spots on our weekly best dressed list.

Swift’s runner-up look (worn to N.Y.C.’s Ripple of Hope gala on Monday) consisted of a gold tulle embroidered Oscar de la Renta tea-length design, nude Jimmy Choo pumps and Lorraine Schwartz earrings. And if you’re as smitten as everyone else is with this festive ensemble — click here to get the look for less.

To check out Swift’s other ranking outfit (it’s totally different from her Oscar de la Renta dress), and to find out who else earned a place in the top 10, click here. Tell us: Whose outfit do you like better — Holmes’s LBD or Swift’s gold party dress?

–Jennifer Cress

Read More..

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..