Quest: U.S. economy to dominate Davos

The United States and the sorry state of its political and budgetary process will be the center of attention at Davos, writes Quest

STORY HIGHLIGHTS

• Quest: Davos is a chance to see where the political and economic landmines are in 2013


• Quest: People will be speculating about how dysfunctional the U.S. political process has become


• Quest: Davos has been consumed by eurozone sovereign debt crises for three years

Editor's note: Watch Quest Means Business on CNN International, 1900pm GMT weekdays. Quest Means Business is presented by CNN's foremost international business correspondent Richard Quest. Follow him on Twitter.

(CNN) -- It is that time of the year, again. Come January no sooner have the Christmas trees been taken down, as the winter sales are in full vicious flood the world of business start thinking about going to the world economic forum, better known as Davos.

For the past three years Davos has been consumed by the eurozone sovereign debt crises.

As it worsened the speculation became ever more frantic.....Will Greece leave the euro? Will the eurozone even survive? Was this all just a big German trick to run Europe? More extreme, more dramatic, more nonsense.

Can China be the biggest engine of growth for the global economy. Round and round in circles we have gone on these subjects until frankly I did wonder if there was anything else to say short of it's a horrible mess!

This year there is a new bogey man. The US and in particular the sorry state of the country's political and budgetary process will, I have little doubt, be the center of attention.

Read more: More 'cliffs' to come in new Congress

Not just because Congress fluffed its big test on the fiscal cliff, but because in doing so it created many more deadlines, any one of which could be deeply unsettling to global markets... There is the $100 billion budget cutbacks postponed for two months by the recent agreement; postponed to the end of February.

At exactly the same time as the US Treasury's ability to rob Peter to pay Paul on the debt ceiling crises comes to a head.

Read more: Both Obama, GOP set for tough talks ahead

The Treasury's "debt suspension period" is an extraordinary piece of financial chicanery that if we tried it with our credit cards would get us locked up!! Then there is the expiration of the latest continuing resolution, the authority by which congress is spending money.

There is the terrifying prospect that all these budget woes will conflate into one big political fist fight as the US faces cutbacks, default or shutdown!!

I am being alarmist. Most rational people believe that the worst sting will be taken out of this tail....not before we have all been to the edge...and back. And that is what Davos will have on its mind.

People will be speculating about how dysfunctional the US political process has become and is it broken beyond repair (if they are not asking that then they should be...)

They will be pondering which is more serious for risk...the US budget and debt crises or the Eurozone sovereign debt debacle. A classic case of between the devil and the deep blue sea.

The official topic this year is Resilient Dynamism. I have absolutely no idea what this means. None whatsoever. It is another of WEF's ersatz themes dreamt up to stimulate debate in what Martin Sorrell has beautifully terms "davosian language" In short everyone interprets it as they will.

What I will enjoy, as I do every year, is the chance to hear the global players speak and the brightest and best thinkers give us their take on the global problems the atmosphere becomes febrile as the rock-stars of finance and economics give speeches, talk on panels and give insight.

Of course comes of these musings, it never does at Davos. That's not the point. This is a chance to take stock and see where the political and economic landmines are in 2013. I like to think of Davos as the equivalent of Control/Alt/Delete. It allows us to reboot.

We leave at least having an idea of where people stand on the big issues provided you can see through the panegyrics of self congratulatory back slapping that always takes place whenever you get like minded people in one place... And this year, I predict the big issue being discussed in coffee bars, salons and fondue houses will be the United States and its budgetary woes.

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Dozens of business leaders endorse gay marriage in Illinois

Dozens of Illinois business leaders and several companies publicly endorsed gay marriage Sunday in an attempt to reignite the issue after a proposed bill failed to get traction in Springfield this month.

State lawmakers aren't scheduled to be at the Capitol much until early February, and sponsors of a measure to grant gay and lesbian couples the freedom to marry are likely to need some time to win over dozens of rookie colleagues. But in an open letter issued Sunday, business executives stated their case to lawmakers that marriage equality would strengthen the Illinois workforce and boost economic development.

"To be competitive, a state must create an equitable, fair and respectful environment for all of its citizens," the letter said. "For this reason — among others — it is vitally important that Illinois lawmakers enact marriage equality soon."

In addition to Google, Orbitz Worldwide and Groupon, individual signers of the letter include Desiree Rogers, CEO of Johnson Publishing Co.; Lance Chody, CEO of Garrett Popcorn Shops; Fred Eychaner, chairman of the Newsweb Corp.; and Laura Ricketts, co-owner of the Chicago Cubs. Eychaner and Ricketts are openly gay executives who are helping fund the statewide push for same-sex marriage, the Tribune has reported.

Earlier this month, opposition challenged supporters' optimism. In addition to Chicago's Cardinal Francis George and other Catholic bishops across the state, a coalition of Muslims, Mormons, Missouri Synod Lutherans and conservative Anglicans urged Illinois lawmakers not to extend marriage to same-sex couples.

The bishops and ministers from about 1,700 Illinois congregations and ministries said the attempt to alter the state's definition of marriage threatens an institution that society counts on as the ideal environment for raising children and teaching men and women to depend on each other.

While the bill exempts religious institutions from having to consecrate same-sex marriages, religious leaders worry that it would not protect their rights to freely exercise their religious beliefs because they would have to treat same-sex unions as the equivalent of marriage in their business practices. For example, they might be forced to provide health insurance to an employee's same-sex spouse.

John Rowe, chairman emeritus of Exelon, said attending the same-sex weddings of friends in New York last year convinced him to sign the endorsement.

"We saw how moving it was for them, and I suppose that's part of what caused me to say 'Why deny one group this moment of faith and hope and celebration that everybody else has?'" Rowe said.

The letter contends that states such as New York, where gay marriage is legal, now have a competitive edge over Illinois.

"States with the metro areas of New York City, Seattle, Boston, and Baltimore have already legalized marriage equality," the letter said. "Here in the Midwest, Iowa has granted full marriage equality, while Minnesota is poised to do the same later this year. Illinois simply cannot afford to be less competitive than other states."

mbrachear@tribune.com

Twitter @TribSeeker

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France bombs Islamist strongholds in north Mali

BAMAKO/PARIS (Reuters) - French fighter jets pounded Islamist rebel strongholds deep in northern Mali on Sunday as Paris poured more troops into the capital Bamako, awaiting a West African force to dislodge al Qaeda-linked insurgents from the country's north.

The attacks on Islamist positions near the ancient desert trading town of Timbuktu and Gao, the largest city in the north, marked a decisive intensification on the third day of the French mission, striking at the heart of the vast area seized by rebels in April.

France is determined to end Islamist domination of northern Mali, which many fear could act as a base for attacks on the West and for links with al Qaeda in Yemen, Somalia and North Africa.

Defense Minister Jean-Yves Le Drian said France's sudden intervention on Friday had prevented the advancing rebels from seizing Bamako. He vowed that air strikes would continue.

"The president is totally determined that we must eradicate these terrorists who threaten the security of Mali, our own country and Europe," he told French television.

Residents and rebel leaders had reported air raids early on Sunday in the towns of Lere and Douentza in central Mali, forcing Islamists to withdraw. As the day progressed, French jets struck targets further to the north, including near the town of Kidal, the epicenter of the rebellion.

In Gao, a dusty town on the banks of the Niger river where Islamists have imposed an extreme form of sharia law, residents said French jets pounded the airport and rebel positions. A huge cloud of black smoke rose from the militants' camp in the city's north, and trucks ferried dead and wounded to hospital.

"The planes are so fast you can only hear their sound in the sky," resident Soumaila Maiga said by telephone. "We are happy, even though it is frightening. Soon we will be delivered."

Paris said four Rafale jets flew from France to strike rebel training camps, logistics depots and infrastructure around Gao with the aim of weakening the rebels and preventing them from returning southward.

"We blocked the terrorists' advance and from today what we've started to do is to destroy the terrorists' bases behind the front line," French Foreign Minister Laurent Fabius told LCI television.

France has deployed about 550 soldiers to Mali under "Operation Serval" -- named after an African wildcat -- split between Bamako and the town of Mopti, 500 km (300 miles) north.

In Bamako, a Reuters cameraman saw more than 100 French troops disembark on Sunday from a military cargo plane at the international airport, on the outskirts of the capital.

The city's streets were calm, with the sun streaking through the dusty air as the seasonal Harmattan wind blew from the Sahara. Many cars had French flags draped from the windows to celebrate Paris's intervention.

"We thank France for coming to our aid," said resident Mariam Sidibe. "We hope it continues till the north is free."

AFRICAN TROOPS EXPECTED

More than two decades of peaceful elections had earned Mali a reputation as a bulwark of democracy, but that image unraveled in a matter of weeks after a military coup in March which left a power vacuum for the Islamist rebellion.

France convened a U.N. Security Council meeting for Monday to discuss Mali. French President Francois Hollande's intervention has won plaudits from leaders in Europe, Africa and the United States but it is not without risks.

It raised the threat level for eight French hostages held by al Qaeda allies in the Sahara and for the 30,000 French expatriates living in neighboring, mostly Muslim states.

Concerned about reprisals, France has tightened security at public buildings and on public transport. It advised its 6,000 citizens to leave Mali as spokesmen for Ansar Dine and al Qaeda's north Africa wing AQIM promised to exact revenge.

In its first casualty of the campaign, Paris said a French pilot was killed on Friday when rebels shot down his helicopter.

Hours earlier, a French intelligence officer held hostage in Somalia by al Shabaab extremists linked to al Qaeda was killed in a failed commando raid to free him.

Hollande says France's aim is simply to support a mission by West African bloc ECOWAS to retake the north, as mandated by a U.N. Security Council resolution in December.

With Paris pressing West African nations to send their troops quickly, Ivory Coast President Alassane Ouattara, who holds the rotating ECOWAS chairmanship, kick-started the operation to deploy 3,300 African soldiers.

Ouattara, installed in power with French military backing in 2011, convened a summit of the 15-nation bloc for Saturday in Ivory Coast to discuss the mission.

"The troops will start arriving in Bamako today and tomorrow," said Ali Coulibaly, Ivory Coast's African Integration Minister. "They will be convoyed to the front."

The United States is providing transportation and communications support for the push against the Islamist rebels, a U.S. official told Reuters, speaking on condition of anonymity.

The U.S. support also includes intelligence sharing, the official said, without elaborating. Earlier on Sunday, another U.S. official said Washington was considering sending a small number of unarmed surveillance drones.

Britain and Canada have also promised logistical support.

Former French colonies Senegal, Niger and Burkina Faso have all pledged to deploy 500 troops within days. In contrast, regional powerhouse Nigeria, due to lead the ECOWAS force, has suggested it would take time to train and equip the troops.

HOUSE-TO-HOUSE SEARCHES

France, however, appeared to have assumed control of the operation on the ground. Its air strikes allowed Malian troops to drive the Islamists out of the strategic town of Konna, which they had briefly seized this week in their southward advance.

Calm returned to Konna after three nights of combat as the Malian army crushed any remaining rebel fighters. A senior army official said more than 100 rebels had been killed.

"Soldiers are patrolling the streets and have encircled the town," one resident, Madame Coulibaly, told Reuters by phone. "They are searching houses for arms or hidden Islamists."

Analysts expressed doubt, however, that African nations would be able to mount a swift operation to retake north Mali -- a harsh, sparsely populated terrain the size of France -- as neither the equipment nor ground troops were prepared.

"My first impression is that this is an emergency patch in a very dangerous situation," said Gregory Mann, associate professor of history at Columbia University, who specializes in francophone Africa and Mali in particular.

While France and its allies may be able to drive rebel fighters from large towns, they could struggle to prise them from mountain redoubts in the region of Kidal, 300 km (200 miles) northeast of Gao.

Human Rights Watch said at least 11 civilians, including three children, had been killed in the fighting. A spokesman for Doctors Without Borders in neighboring Mauritania said about 200 Malian refugees had fled across the border to a camp at Fassala and more were on their way.

In Bamako, civilians tried to contribute to the war effort.

"We are very proud and relieved that the army was able to drive the jihadists out of Konna. We hope it will not end there, that is why I'm helping in my own way," said civil servant Ibrahima Kalossi, 32, one of over 40 people who queued to donate blood for wounded soldiers.

(Additional reporting by Adama Diarra, Tiemoko Diallo and Rainer Schwenzfeier in Bamako, Pascal Fletcher in Johannesburg, Joe Bavier in Abidjan, Catherine Bremer, Leila Aboud and John Irish in Paris and Phil Stewart in Washington; Writing by Daniel Flynn; Editing by Will Waterman and Roger Atwood)

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Wall Street Week Ahead: Attention turns to financial earnings

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

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

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

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

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

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

EARNINGS AND ECONOMIC EXPECTATIONS

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

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

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

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

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

HOUSING, INDUSTRIAL DATA ON TAP

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

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

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

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

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

POLITICAL ANXIETY

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

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

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

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

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

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

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

(Reporting by Gabriel Debenedetti; editing by Rodrigo Campos)

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Broncos, Ravens tied at 35 heading into OT

DENVER (AP) — The Denver Broncos and Baltimore Ravens went into overtime in their AFC divisional playoff tied at 35 after Joe Flacco threw a 70-yard touchdown pass to Jacoby Jones over Tony Carter and Rahim Moore with 31 seconds left in regulation Saturday.

Leading 35-28 with 1:15 left, the Broncos punted to Jones, the Pro Bowl returner who was overshadowed all day by Trindon Holliday, and he made a fair catch at the 23 with 1:09 to go.

On third-and-3 from his own 30, Flacco wound up and found Jones down the right sideline for the stunning score. Carter let Jones go and Moore tried to go up to bat it down, but mistimed his jump.

The Broncos got the ball at their 20 with 30 seconds left, but Peyton Manning took a knee and this game went into overtime. Denver also went into overtime in the playoffs last year, when Tim Tebow hit Demaryius Thomas for an 80-yard TD on the first play to beat Pittsburgh.

Manning atoned for a fumble that led to a score by Baltimore by driving Denver 88 yards in 10 plays and hitting Thomas from 17 yards out for the go-ahead score that broke a 28-all tie midway through the fourth quarter.

And Holliday became the first player in NFL playoff history to return both a punt and a kickoff for scores.

The Broncos (13-3) were trying to avoid becoming yet another No. 1 seed to lose in the divisional round. Since 2005, eight of the 14 top-seeded teams lost their first game in the playoffs, four in each conference.

They breezed past the Ravens 34-17 in Baltimore on Dec. 16 after racing to a 31-3 lead but this one was going down to the wire — and beyond — something the Broncos didn't do at all during their 11-game winning streak that they brought into the playoffs.

Holliday, the NFL's shortest — and quite possibly fastest — player, followed an amazing block by Jacob Hester to return the second-half kickoff 104 yards to put Denver ahead 28-21. That was 2 yards longer than the record set in 2010 by Atlanta's Eric Weems.

In the first half, Holliday got the scoring started when he fielded Sam Koch's punt, broke one tackle and raced down the Ravens' sideline for a 90-yard TD return, avoiding the punter as he zipped into the end zone. The previous longest TD on a punt return in a playoff game was Jermaine Lewis' 88-yarder for Baltimore in 2001.

Manning, 0-3 in playoff games below 40 degrees, wore gloves on each hand in the cold. He was sacked and coughed up the ball at his 37 late in the third quarter, Paul Kruger recovering for Baltimore.

Ray Rice carried five times for 37 yards, taking it in from a yard out with 20 seconds left in the quarter to tie it at 28.

The 13-degree temperature at kickoff made this the coldest playoff game ever played in Denver. The wind chill was 2. The only colder game played in Denver was against San Diego on Dec. 10, 1972, when the temperature was 9 degrees.

Holliday also returned a punt and a kickoff for scores in the regular season, and his big day came just an hour after NFL Commissioner Roger Goodell reiterated his intention to consider this offseason the idea of abolishing kickoffs altogether for safety's sake.

Goodell said he realizes it's an exciting play but worries that players will keep getting head injuries.

The Ravens countered Holliday's speed with Torrey Smith's. The Baltimore receiver breezed past Champ Bailey for two long touchdowns in the first half, including one just before halftime that tied it at 21.

Smith had just two catches in the first half, but they covered 91 yards and both went for scores.

He sped past Bailey for a 59-yard TD in the first quarter and then beat him down the sideline for a 32-yard TD catch 36 seconds left before the break that capped a three-play, 58-yard drive that began after Matt Prater botched a 52-yard field-goal attempt that would have given Denver a double-digit lead.

Running back Knowshon Moreno's first touchdown catch of the season, a 13-yard grab in tight coverage by linebacker Dannell Ellerbe, had given the Broncos a 21-14 lead. Moreno later left with a knee injury.

Manning, the league's only four-time MVP, had lost his three previous playoff games below 40 degrees, all while playing for the Indianapolis Colts, who released him last year after a series of neck operations. Manning had a stellar bounce-back season in Denver, throwing for 4,659 yards and a team-record 37 TDs.

Wearing gloves on both hands for the first time in his career — the one on the right hand as much a concession to the altered feel of his grip following the four neck surgeries as it was for the wintry weather, Manning threw a 15-yard TD toss to Brandon Stokley to tie it at 14.

Baltimore tied it at 7 when Smith got behind Bailey and hauled in Flacco's 59-yard touchdown toss.

Forty-two seconds later, cornerback Corey Graham picked off a Manning pass that deflected off receiver Eric Decker and returned it 39 yards for the score — and the Broncos trailed for the first time since Dec. 2 against Tampa Bay.

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Online: http://pro32.ap.org/poll and http://twitter.com/AP_NFL

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Follow AP Pro Football Writer Arnie Stapleton on Twitter: http://twitter.com/arniestapleton

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Aaron Swartz, Internet activist and programmer, dead at 26

Internet activist and computer prodigy Aaron Swartz, who helped create an early version of the Web feed system RSS and was facing federal criminal charges in a controversial fraud case, has committed suicide at age 26, authorities said on Saturday.

Police found Swartz's body in his apartment in the New York City borough of Brooklyn on Friday, according to a spokeswoman for the city's chief medical examiner, which ruled the death a suicide by hanging.

Swartz is widely credited with being a co-author of the specifications for the Web feed format RSS 1.0, which he worked on at age 14, according to a blog post on Saturday from his friend, science fiction author Cory Doctorow.

RSS, which stands for Rich Site Summary, is a format for delivering to users content from sites that change constantly, such as news pages and blogs.

Over the years, he became an online icon for helping to make a virtual mountain of information freely available to the public, including an estimated 19 million pages of federal court documents from the PACER case-law system.

"Information is power. But like all power, there are those who want to keep it for themselves," Swartz wrote in an online "manifesto" dated 2008.

"The world's entire scientific and cultural heritage, published over centuries in books and journals, is increasingly being digitized and locked up by a handful of private corporations. ... sharing isn't immoral -- it's a moral imperative. Only those blinded by greed would refuse to let a friend make a copy," he wrote.

That belief - that information should be shared and available for the good of society - prompted Swartz to found the nonprofit group DemandProgress.

The group led a successful campaign to block a bill introduced in 2011 in the U.S. House of Representatives called the Stop Online Piracy Act.

The bill, which was withdrawn amid public pressure, would have allowed court orders to curb access to certain websites deemed to be engaging in illegal sharing of intellectual property.

Swartz and other activists objected on the grounds it would give the government too many broad powers to censor and squelch legitimate Web communication.

But Swartz faced trouble in July 2011, when he was indicted by a federal grand jury of wire fraud, computer fraud and other charges related to allegedly stealing millions of academic articles and journals from a digital archive at the Massachusetts Institute of Technology.

According to the federal indictment, Swartz - who was a fellow at Harvard University's Edmond J. Safra Center for Ethics - used MIT's computer networks to steal more than 4 million articles from JSTOR, an online archive and journal distribution service.

JSTOR did not press charges against Swartz after the digitized copies of the articles were returned, according to media reports at the time.

Swartz, who pleaded not guilty to all counts, faced 35 years in prison and a $1 million fine if convicted. He was released on bond. His trial was scheduled to start later this year.

'HARSH ARRAY OF CHARGES'

In a statement released Saturday, the family and partner of Swartz praised his "brilliance" and "profound" commitment to social justice, and struck out at what they said were decisions made at MIT and by prosecutors that contributed to his death.

"Aaron's death is not simply a personal tragedy. It is the product of a criminal justice system rife with intimidation and prosecutorial overreach," the statement said.

"The U.S. Attorney's office pursued an exceptionally harsh array of charges, carrying potentially over 30 years in prison, to punish an alleged crime that had no victims," it added.

Neither the U.S. Attorney's office nor MIT could be reached for comment.

Swartz's funeral is scheduled for Tuesday in Highland Park, Illinois. On Saturday, online tributes to Swartz flooded across cyberspace.

"Aaron had an unbeatable combination of political insight, technical skill and intelligence about people and issues," Doctorow, co-editor of the weblog Boing Boing, wrote on the site.

Doctorow wrote that Swartz had "problems with depression for many years."

Swartz also played a role in building the news-sharing website Reddit, but left the company after it was acquired by Wired magazine owner Conde Nast. Recalling that time of his life, Swartz described his struggles with dark feelings.

In an online account of his life and work, Swartz said he became "miserable" after going to work at the San Francisco offices of Wired after Reddit was acquired.

"I took a long Christmas vacation," he wrote. "I got sick. I thought of suicide. I ran from the police. And when I got back on Monday morning, I was asked to resign."

Tim Berners-Lee, who is credited as the most important figure in the creation of the World Wide Web, commemorated Swartz in a Twitter post on Saturday.

"Aaron dead," he wrote. "World wanderers, we have lost a wise elder. Hackers for right, we are one down. Parents all, we have lost a child. Let us weep."

(Reporting by Alex Dobuzinskis in Los Angeles and P.J. Huffstutter in Chicago; Editing by Colleen Jenkins, Doina Chiacu and Philip Barbara)

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Russia rejects Assad exit as precondition for Syria deal

MOSCOW/BEIRUT (Reuters) - Russia voiced support on Saturday for international peace envoy Lakhdar Brahimi but insisted Syrian President Bashar al-Assad's exit cannot be a precondition for a deal to end the country's conflict.

Some 60,000 Syrians have been killed during the 21-month-old revolt and world powers are divided over how to stop the escalating bloodshed. Government aircraft bombed outer districts of Damascus on Saturday after being grounded for a week by stormy weather, opposition activists in the capital said.

A Russian Foreign Ministry statement following talks on Friday in Geneva with the United States and Brahimi reiterated calls for an end to violence in Syria, but there was no sign of a breakthrough.

Brahimi said the issue of Assad, who the United States, European powers and Gulf-led Arab states insist must step down to end the civil war, appeared to be a sticking point.

Russia's Foreign Ministry said: "As before, we firmly uphold the thesis that questions about Syria's future must be decided by the Syrians themselves, without interference from outside or the imposition of prepared recipes for development."

Russia has been Assad's most powerful international backer, joining with China to block three Western- and Arab-backed U.N. Security Council resolutions aimed to pressure him or push him from power. Assad can also rely on regional powerhouse Iran.

Russia called for "a political transition process" based on an agreement by foreign powers last June.

Brahimi, who is trying to build on that agreement, has met three times with senior Russian and U.S. diplomats since early December and met Assad in Damascus.

Russia and the United States disagreed over what the June agreement meant for Assad, with Washington saying it sent a clear signal he must go and Russia contending it did not.

Qatar on Saturday made a fresh call for an Arab force to end bloodshed in Syria if Brahimi's efforts fail, according to the Doha-based al Jazeera television.

"It is not a question of intervention in Syria in favor of one party against the other, but rather a force to preserve security," Qatar's Prime Minister and Foreign Minister, Sheikh Hamad bin Jassim al-Thani, said in an al Jazeera broadcast.

CONFLICT INTENSIFIES

Moscow has been reluctant to endorse the "Arab Spring" popular revolts of the last two years, saying they have increased instability in the Middle East and created a risk of radical Islamists seizing power.

Although Russia sells arms to Syria and rents one of its naval bases, the economic benefit of its support for Assad is minimal. Analysts say President Vladimir Putin wants to prevent the United States from using military force or support from the U.N. Security Council to bring down governments it opposes.

However, as rebels gain ground in the war, Russia has given indications it is preparing for Assad's possible exit, while continuing to insist he must not be forced out by foreign powers.

Opposition activists say a military escalation and the hardship of winter have accelerated the death toll.

Rebel forces have acquired more powerful anti-tank and anti-aircraft weapons during attacks on Assad's military bases.

Assad's forces have employed increasing amounts of military hardware including Scud-type ballistic missiles in the past two months. New York-based Human Rights Watch said they had also used incendiary cluster bombs that are banned by most nations.

STALEMATE IN CITIES

The weeklong respite from aerial strikes has been marred by snow and thunderstorms that affected millions displaced by the conflict, which has now reached every region of Syria.

On Saturday, the skies were clear and jets and helicopters fired missiles and dropped bombs on a line of towns to the east of Damascus, where rebels have pushed out Assad's ground forces, the Syrian Observatory for Human Rights said.

The British-based group, which is linked to the opposition, said it had no immediate information on casualties from the strikes on districts including Maleiha and farmland areas.

Rebels control large swathes of rural land around Syria but are stuck in a stalemate with Assad's forces in cities, where the army has reinforced positions.

State TV said government forces had repelled an attack by terrorists - a term it uses for the armed opposition - on Aleppo's international airport, now used as a helicopter base.

Reuters cannot independently confirm reports due to severe reporting restrictions imposed by the Syrian authorities and security constraints.

On Friday, rebels seized control of one of Syria's largest helicopter bases, Taftanaz in Idlib province, their first capture of a military airfield.

Eight-six people were killed on Friday, including 30 civilians, the Syrian Observatory said.

(Writing by Oliver Holmes; Editing by Tom Pfeiffer and Doina Chiacu)

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Wall Street Week Ahead: Attention turns to financial earnings

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

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

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

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

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

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

EARNINGS AND ECONOMIC EXPECTATIONS

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

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

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

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

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

HOUSING, INDUSTRIAL DATA ON TAP

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

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

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

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

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

POLITICAL ANXIETY

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

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

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

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

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

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

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

(Reporting by Gabriel Debenedetti; editing by Rodrigo Campos)

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Rookies rule at the Sony Open

HONOLULU (AP) — Two days into his PGA Tour career, Russell Henley was on his way to breaking a record.

Henley putted for birdie on every hole on his way to a second straight round of a 7-under 63, giving him a two-shot lead over fellow rookie Scott Langley among early starters Friday in the Sony Open. He was 14-under 126, which would break the 36-hole scoring record at this event by two shots.

"It's pretty surreal," Henley said.

In the first full-field event of the season, the rookies were leading the way. All they did on another windy, warm day along the shores of Oahu was trade places atop the leaderboard. Langley opened with a 62 and followed that with a 66. That typically would be enough to stay in the lead.

Langley said he tried to stay aggressive, and then he felt he had no choice. He birdied his last three holes to reach 128.

Unless anyone could catch them in the afternoon, they would play together a third straight time, in the last group going into the weekend. The college grads first were linked when they shared low amateur honors at Pebble Beach in the 2010 U.S. Open.

"It's never easy to back up a really good round, I kind of got off to a little slower start," Langley said. "But it was certainly nice to finish the way I did and kind of get back in it with Russ. He played so well, and I was just trying to keep pace as much as I can. To finish that way was really good."

The previous 36-hole record at the Sony Open was 128 by five players, most recently John Cook in 2002.

Among the late starters was Scott Piercy, who opened with a 64 and already was at 10 under for the tournament as he headed to his back nine.

Dustin Johnson won't get a chance to match Ernie Els as the only players to sweep the two Hawaii events. Johnson, who won last week at Kapalua, withdrew after playing nine holes because of the flu.

Chris Kirk made a pair of tap-in eagles — a 5-iron into the wind to 3 feet on the ninth, a 7-iron with the wind to 2 feet on the 18th — for a 62 that put him at 10-under 130 along with Tim Clark, who had a 66.

Pat Perez, working on his new attitude of seeing silver linings instead of black clouds, ran off three straight birdies early in his round for a 63 and was another shot back.

Henley took over the lead for the first time with a shot into 8 feet to a front pin on No. 2, his 11th hole of the day. With birdies on the fifth and sixth holes, it looked as though he might pull away when he stretched his lead to four shots.

Langley came to life with a 7-iron and a 20-foot birdie putt on the seventh, then a sand wedge into the par-4 eighth and more work than he wanted on the par-5 ninth, when he got up-and-down for birdie from near the hospitality tent to the right of the green.

"This feels like a Monday qualifier," Langley said of the low scores, not to mention the company he has been keeping. Langley and Henley were born two weeks apart.

They became friends after Pebble Beach when they flew together to Royal Portrush for the Palmer Cup, and they helped each other on the practice range when their games were in need of repair.

The difference was their road to the PGA Tour.

Henley won a Nationwide Tour event while still at Georgia, and then he won twice on that tour last year to easily finish among the top 25 on the money list.

Langley, a former NCAA champion from Illinois, went through a bad patch last year when he finished last in the second stage of Q-school and had no status. He kicked around the smaller tours, tried a few Monday qualifiers, and then made his way through Q-school and earned his card with two shots to spare.

They're neck-and-neck going into the weekend, both hopeful they ride their momentum.

The surprise might be Clark, who was runner-up at the Sony Open two years ago until he suffered a mysterious elbow injury that cost him a year of trying to figure out what was wrong and how to get better. He is close to healthy now, and it's starting to show.

"Obviously, I've still got to take care of myself and look after it," Clark said. "But at least coming out to the golf course, I feel like I'm pretty much 100 percent."

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Saudi execution: Brutal and illegal?

STORY HIGHLIGHTS

• Saudi authorities beheaded Rizana Nafeek, a Sri Lankan woman


• She was convicted of killing a baby of the family employing her as a housemaid


• This was despite Nafeek's claims that the baby died in a choking accident


• Becker says her fate "should spotlight the precarious existence of domestic workers"

Jo Becker is the Children's Rights Advocacy Director for Human Rights Watch and author of 'Campaigning for Justice: Human Rights Advocacy in Practice.' Follow Jo Becker on Twitter.

(CNN) -- Rizana Nafeek was a child herself -- 17 years old, according to her birth certificate -- when a four-month-old baby died in her care in Saudi Arabia. She had migrated from Sri Lanka only weeks earlier to be a domestic worker for a Saudi family.

Although Rizana said the baby died in a choking accident, Saudi courts convicted her of murder and sentenced her to death. On Wednesday, the Saudi government carried out the sentence in a gruesome fashion, by beheading Rizana.

Jo Becker

Read more: Outrage over beheading of Sri Lankan woman by Saudi Arabia

Rizana's case was rife with problems from the beginning. A recruitment agency in Sri Lanka knew she was legally too young to migrate, but she had falsified papers to say she was 23. After the baby died, Rizana gave a confession that she said was made under duress -- she later retracted it. She had no lawyer to defend her until after she was sentenced to death and no competent interpreter during her trial. Her sentence violated international law, which prohibits the death penalty for crimes committed before age 18.

Rizana's fate should arouse international outrage. But it should also spotlight the precarious existence of other domestic workers. At least 1.5 million work in Saudi Arabia alone and more than 50 million -- mainly women and girls -- are employed worldwide according to the International Labour Organization (ILO).

Read more: Indonesian maid escapes execution in Saudi Arabia

Again according to the ILO, the number of domestic workers worldwide has grown by more than 50% since the mid-1990s. Many, like Rizana, seek employment in foreign countries where they may be unfamiliar with the language and legal system and have few rights.

When Rizana traveled to Saudi Arabia, for example, she may not have known that many Saudi employers confiscate domestic workers' passports and confine them inside their home, cutting them off from the outside world and sources of help.

It is unlikely that anyone ever told her about Saudi Arabia's flawed criminal justice system or that while many domestic workers find kind employers who treat them well, others are forced to work for months or even years without pay and subjected to physical or sexual abuse.

Passport photo of Rizana Nafeek

Read more: Saudi woman beheaded for 'witchcraft and sorcery'

Conditions for migrant domestic workers in Saudi Arabia are among some of the worst, but domestic workers in other countries rarely enjoy the same rights as other workers. In a new report this week, the International Labour Organization says that nearly 30% of the world's domestic workers are completely excluded from national labor laws. They typically earn only 40% of the average wage of other workers. Forty-five percent aren't even entitled by law to a weekly day off.

Last year, I interviewed young girls in Morocco who worked 12 hours a day, 7 days a week for a fraction of the minimum wage. One girl began working at age 12 and told me: "I don't mind working, but to be beaten and not to have enough food, this is the hardest part."

Many governments have finally begun to recognize the risks and exploitation domestic workers face. During 2012, dozens of countries took action to strengthen protections for domestic workers. Thailand, and Singapore approved measures to give domestic workers a weekly day off, while Venezuela and the Philippines adopted broad laws for domestic workers ensuring a minimum wage, paid holidays, and limits to their working hours. Brazil is amending its constitution to state that domestic workers have all the same rights as other workers. Bahrain codified access to mediation of labor disputes.

Read more: Convicted killer beheaded, put on display in Saudi Arabia

Perhaps most significantly, eight countries acted in 2012 to ratify -- and therefore be legally bound by -- the Domestic Workers Convention, with more poised to follow suit this year. The convention is a groundbreaking treaty adopted in 2011 to guarantee domestic workers the same protections available to other workers, including weekly days off, effective complaints procedures and protection from violence.

The Convention also has specific protections for domestic workers under the age of 18 and provisions for regulating and monitoring recruitment agencies. All governments should ratify the convention.

Many reforms are needed to prevent another tragic case like that of Rizana Nafeek. The obvious one is for Saudi Arabia to stop its use of the death penalty and end its outlier status as one of only three countries worldwide to execute people for crimes committed while a child.

Labor reforms are also critically important. They may have prevented the recruitment of a 17 year old for migration abroad in the first place. And they can protect millions of other domestic workers who labor with precariously few guarantees for their safety and rights.

Read more: Malala, others on front lines in fight for women

The opinions expressed in this commentary are solely those of Jo Becker.

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