U.S. growth quickens, but speed bumps ahead (Reuters)

WASHINGTON (Reuters) ? The U.S. economy grew at its fastest pace in 1-1/2 years in the fourth quarter, but a rebuilding of stocks by businesses and slower business spending warned of weaker growth in early 2012.

Gross domestic product expanded at a 2.8 percent annual rate, the Commerce Department said on Friday, a sharp acceleration from the 1.8 percent in the prior three months.

It was, however, a touch below economists expectations in a Reuters poll for a 3 percent rate, and two-thirds of the increase was due to the build-up in business inventories.

Soft underlying demand and a sharp slowing in core inflation supported the Federal Reserve's decision this week to keep in place an ultra easy monetary policy to nurse the recovery.

"The areas of strength are unlikely to be strong in the current quarter and the areas of weakness are more than likely to be weaker," said Steve Blitz, a senior economist at ITG Investment Research in New York. "Frankly, I don't think there is an awful lot the Fed can do about it."

The data helped push U.S. stocks slightly lower, while longer-dated Treasury debt prices are slipped. The dollar fell against a basket of currencies.

The economy got a temporary boost from the rebuilding of inventories, which logged the biggest increase since the third quarter of 2010.

Excluding inventories, the economy grew at a tepid 0.8 percent rate, a sharp step-down from the prior period's 3.2 percent pace and a sign of weak domestic demand.

THE POLITICS OF GROWTH

For all of last year, the economy grew just 1.7 percent, and economists expect only a bit of quickening this year.

Sluggish growth could hurt President Barack Obama's chances of re-election in November, and might lead the Fed to launch a further round of bond purchases to spur the recovery.

"Clearly, much work remains to achieve the Fed's dual mandate of maximum sustainable employment in the context of price stability," New York Federal Reserve Bank President William Dudley told reporters.

The central bank on Wednesday said it expected to keep interest rates at rock bottom levels at least through late 2014, and it warned the economy still faced big risks, a suggestion the euro zone debt crisis could still hit hard.

U.S. Treasury Secretary Timothy Geithner on Friday also gave a lukewarm assessment of economy's prospects.

"We're still repairing the damage done by the financial crisis. On top of that we face a more challenging world. We have a lot of challenges ahead in the United States," he said at the World Economic Forum in Davos.

STRENGTH AND WEAKNESS

The robust inventory accumulation in the fourth quarter - a $56 billion build-up - suggests the recovery will lose a step at some point in early 2012 when businesses throttle back.

But economists said there was no sign businesses were uncomfortable yet with the amount of inventory they had on hand, suggesting they could add more in the current quarter.

"We had dealer stock build in the fourth quarter, but it was really to make sure we had the inventories that support the going-rate in terms of days' supply," Ford Motor Corp Chief Financial Officer Lewis Booth said on a conference call.

"I think we're at 58 days, which is actually lower than our typical level," he said.

Weak spots during the quarter included business investment spending, which advanced at just a 1.7 percent annual rate, the slowest since 2009.

A sharp drop in defense spending and still weak outlays at state and local authorities combined to yield a fifth straight quarterly contraction in government spending.

Though exports held up, an increase in imports left a trade gap that also chipped growth, and while home construction rose at the fastest pace since the second quarter of 2010, it was helped by unseasonably mild winter weather.

SLUGGISH INCOME GROWTH

Consumer spending, which accounts for about 70 percent of U.S. economic activity, also accelerated, stepping up to a 2 percent rate from the third-quarter's 1.7 percent.

However, it was largely driven by pent-up demand for cars. The Japanese earthquake and tsunami had disrupted supplies early last year, leaving showrooms bereft of popular models.

Consumers also benefited from a moderation in inflation.

A price index for personal spending rose at a 0.7 percent rate in the fourth-quarter, the slowest increase in 1-1/2 years.

A core measure that strips out food and energy costs rose at a 1.1 percent pace, off sharply from the prior quarter and the slowest in a year. The slowdown could worry the Fed, which would prefer it nearer its 2 percent inflation target.

High unemployment has led to sluggish income growth, which in turn has prompted households to tap savings and credit cards to fund their purchases.

A sustained GDP growth pace of at least 3 percent would likely be needed to make noticeable headway in absorbing the unemployed and those who have given up the search for work.

"Though the unemployment rate has improved, the jobs market remains a major challenge," said Adolfo Laurenti, deputy chief economist at Mesirow Financial in Chicago.

"The high level of people out of the workforce and underemployed people show there isn't really much income generation to contribute to a better spending pattern."

Even so, another report on Friday showed consumer sentiment reached its highest level in nearly a year this month.

(Additional reporting by Ben Klayman in Detroit; Editing by Neil Stempleman and Tim Ahmann)

Source: http://us.rd.yahoo.com/dailynews/rss/economy/*http%3A//news.yahoo.com/s/nm/20120127/bs_nm/us_usa_economy

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Avastin's Failure in Breast Cancer: New Study May Explain Why It Happened (LiveScience.com)

A new study may explain why the cancer drug Avastin hasn't worked in the treatment of breast cancer patients. Although the drug stops tumor growth for a short time, it often leads to more invasive tumors in the long run.

The reason for this revved-up invasiveness, researchers concluded from experiments done in mice, is that drugs like Avastin increase the portion of a tumor made of breast cancer stem cells.

Although Avastin, when initially given, causes some cancer cells to die and tumors to shrink, what's left behind are the cancer stem cells, according to the study. These cells can then multiply, and they are among the most lethal cancer cells ? they can sprout new tumors more easily than run-of-the-mill cancer cells.

The finding suggests that clinicians could improve Avastin's effectiveness by blocking this unwanted effect of the drug. It's a potentially bright spot for the drug, after a November decision by the Food and Drug Administration that the drug should not be used to treat breast cancer?after studies showed the drug failed to lengthen patient's lives.

"This result explains why they don't work as well as we hoped it would, and it really points to what we need to do to develop drug combinations that are more effective," said Dr. Max Wicha, author of the new study and an oncologist at the University of Michigan.

The new findings, which may also apply to other drugs in the same class as Avastin, were published Monday (Jan. 23) in Proceedings of the National Academy of Sciences.

The seeds of a tumor

Avastin falls into a category of cancer drugs called antiangiogenic agents, which aim to work by blocking the growth of blood vessels that supply tumors with vital nutrients and oxygen. Without a blood supply, tumors will die, the thinking goes.

"There was a lot of excitement about using these drugs to block the blood supply to tumors," Wicha said. "But the first large studies showed that while Avastin seemed to be preventing tumors from progressing for a few months, the tumors would then start to grow again, and be even more aggressive."

Wicha said he and his colleagues suspected the cause of the new, aggressive growth, might be cancer stem cells. "These cells are the most dangerous, if they're left in the body," he explained. "They're like the seeds of a plant."

The researchers tested their theory by giving an antiangiogenic drug to mice with breast cancer tumors. As expected, the tumors shrank and had fewer blood vessels feeding them. When the team analyzed the cells within the tumors, however, the tumors of mice that had been treated with an antiangiogenic drug had five times more stem cells.

Further, the scientists found, the lack of oxygen ? called hypoxia ? in the tissues that followed the death of the blood vessels had the side effect of encouraging the growth of these dangerous cells. If doctors could combine drugs that kill the cancer stem cells with antiangiogenic drugs, they may have a winning formula, Wicha said.

"Our research suggests that it's going to necessary to target both angles of this at the same time," he said.

Two sides of a drug

The new findings didn't surprise Celeste Simon, a molecular biologist at the University of Pennsylvania School of Medicine who studies the role of the body's low oxygen environments to human health.?

"Stem cells really like to reside in a low oxygen area," Simon said.

What the study adds, Simon said, is evidence that drugs like Avastin increase the pool of cancer stem cells living in these low-oxygen conditions.

"The notion is that by making the tumor more hypoxic, you're actually selecting for the more aggressive cells," she said. "This and other papers underscore a growing idea in the therapeutic world that, like all treatments, antiangiogenic drugs need to be very carefully evaluated in terms of their full impact on human health."

But more work is needed, she said, to flesh out the full molecular details of the observation. Tumors implanted into mice, such as the study used, aren't always a perfect mimic of human biology. "While these results are intriguing, they need to be followed up, from my point of view, with experiments on more sophisticated mouse models or primary tumors," Simon said.

Pass it on: ?Although Avastin successfully cuts off the blood supply of breast cancer tumors, it also increases the number of so-called breast cancer stem cells that can lead to tumor growth in the long run.

This story was provided by MyHealthNewsDaily, a sister site to LiveScience. Follow MyHealthNewsDaily on Twitter @MyHealth_MHND. ?Find us on?Facebook.

Source: http://us.rd.yahoo.com/dailynews/rss/cancer/*http%3A//news.yahoo.com/s/livescience/20120127/sc_livescience/avastinsfailureinbreastcancernewstudymayexplainwhyithappened

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North Korea's new nuclear plant a safety worry: expert (Reuters)

SEOUL (Reuters) ? Secretive North Korea is making rapid progress in building a uranium-fuelled reactor that poses an alarming safety risk, a nuclear expert said on Thursday.

Siegfried Hecker, who has visited the North's main Yongbyon nuclear facility four times since 2004 and was the last foreign expert to visit the site in late 2010, said he was very concerned the reactor could be technically flawed.

"In spite of their industrial difficulties they have continued to build it at a good pace," he told Reuters in a telephone interview from Stanford University in the United States.

"What alarms me is that I have never had the sense they had the sufficient regulatory oversight in order to be able to build this thing safely, and operate it safely," he said, adding the lightwater reactor could be operational in two years.

"From a technical standpoint, they should not proceed with the completion of the reactor and operate it on the basis of lack of connection with the international safety community. That is just too high of a risk."

A series of satellite images taken over the past year were proof that the impoverished state was serious about finishing the reactor, Hecker said, even as it struggled to feed millions of its undernourished population.

Analysts say the North's new young leader, Kim Jong-un, will continue with his father's militaristic policy, conscious that the support of the powerful army is vital to a third generation of Kim-family rule.

The United States and South Korea say the uranium enrichment facility and reactor are in breach of agreements reached with North Korea, and demand that it halt all nuclear activities before they will consider a resumption of aid.

DILEMMA

The reactor appeared to be designed for generating electricity, Hecker said, but coupled with a nearby uranium enrichment facility, the complex could be converted for use in making an atomic bomb along with its plutonium program.

North Korea has tested nuclear devices twice and experts say it has enough fissile material to make six to eight nuclear bombs.

Pyongyang expelled international nuclear inspectors in 2009, a few months after aid-for-denuclearization talks broke down.

Hecker said the United States and South Korea found themselves in the dilemma of do they try force the North to stop construction of the experimental reactor, or do they allow North Korea to proceed and offer to help to avert a nuclear disaster?

"The international and political community has another couple of years to come to a resolution," said Hecker, who previously directed the Los Alamos National Laboratory where the atomic bomb was developed.

He said one solution, although difficult to swallow for the United States and South Korea, was to allow experts from China, the North's main ally and benefactor, to assess the facility's safety.

Hecker said the biggest concern was that a seismic event could trigger a power cut at Yongbyon, drawing a comparison to the meltdown at the Fukushima plant in Japan last year.

Although the Korean peninsula is not prone to major earthquakes, minor tremors are frequent. There is also concern about volcanic activity in the North.

The Yongbyon nuclear complex is little more than 100 km (60 miles) from China and about 200 km (120 miles) from South Korea.

(Editing by Robert Birsel)

Source: http://us.rd.yahoo.com/dailynews/rss/asia/*http%3A//news.yahoo.com/s/nm/20120126/wl_nm/us_korea_north_nuclear

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Caterpillar profit jumps 58 percent (Reuters)

(Reuters) ? Caterpillar Inc (CAT.N) reported a 58 percent rise in quarterly earnings that blew away Wall Street expectations on record sales of construction and mining equipment, and projected strong growth for 2012.

The strength seen by Caterpillar, a bellwether for global spending and credit conditions, could be seen as a much-needed boost to those concerned about consumer confidence and sovereign debt. The company's forecasts have long been seen as one of the more telling indicators of future growth or malaise.

Caterpillar's results cap a record 2011 in terms of revenue and profits, and it posted its biggest yearly growth rate for sales and income since 1947. The company has been a leading name in a U.S. industrial sector that enjoyed a widespread rebound in 2011.

Acquisitions, increased demand for mining equipment, high commodity prices and sales growth in construction machinery and parts supported Caterpillar during the year. Price increases and higher inventories also fueled the performance.

Investors reacted positively to the report, with shares up 3.2 percent at $112.57, about $4 shy of a 52-week high set in May.

Peoria, Illinois-based Caterpillar said it would continue to

break records in 2012, with profit expected to rise 25 percent to $9.25 a share and revenue projected to increase between 13 percent and 20 percent. The outlook outpaced analyst expectations and is based on a forecast for higher sales for all geographic regions and business segments except marine engines.

"We're expecting 2012 to be another year of good growth," Caterpillar Chief Executive Doug Oberhelman said in a press release. "We have to be prepared for recovery in the developed world beyond 2012 and continued growth in emerging markets."

RECESSION "UNLIKELY"

The company said the U.S. economy will continue to experience slow growth. Meanwhile, China is moderating, and Latin America growth could slow down.

It estimated that the eurozone debt crisis could lead to negative growth in the region during the first two quarters of 2012 but "it is unlikely to trigger a worldwide recession," and sees improvement there by the second half of the year.

The company said tax expenses are the biggest challenge in 2012 due to its geographic sales mix and regulations.

Caterpillar said construction markets in the United States and Europe remain "depressed," contrasting the strong growth taking place in emerging regions. Still, the company sees buyers in developed markets snapping up new machinery in order to replace outdated equipment.

During a conference call, the company said it expects to "finally" see some growth in U.S. construction spending, but it will remain relatively low.

The company is gaining market share in many key regions -- including China -- putting further pressure on the company's production capacity. In some cases, customers are on waiting lists that span several years because of these constraints. Buyers of new large trucks are being quoted delivery times into 2014, for instance.

Meeting demand will also lead to increased costs as the company scrambles to add capacity in key regions, particularly to meet demand for mining equipment.

Caterpillar will invest about $4 billion on capital expenditures in 2012, compared with $2.6 billion in 2011.

Caterpillar said it added 14,000 employees in 2011 in order to meet growing demand, 6,500 of which were added in the United States. The company said it exported nearly $20 billion worth of goods in 2011, representing a third of its total revenue for the year.

Caterpillar spokesman Jim Dugan said the company anticipates adding more employees in 2012 as it opens or expands facilities.

PROFITS, SALES UP

The company posted net income for the fourth quarter of $1.55 billion, or $2.32 per share, compared with $968 million, or $1.47 per share, a year ago. That result was 59 cents above the analysts' average estimate of $1.73 a share, according to Thomson Reuters I/B/E/S.

Sales rose 35 percent to $17.24 billion, above Wall Street estimates of $16.05 billion.

Caterpillar reported growth in all three of its product sectors -- construction equipment, such as bulldozers; resource equipment needed for activities like mining; and power systems, including engines. The resource equipment segment was the fastest-growing unit in terms of sales, but profit growth in the construction business was more robust.

It also is seeing steady demand for after-market parts needed for equipment already in use.

Increased expenses related to production volume, capacity expansion and incentive compensation added about $450 million worth of costs in the fourth quarter alone. The company also spent money on its Caterpillar Japan restructuring and integrating new business.

(Editing by Maureen Bavdek and Mark Porter)

Source: http://us.rd.yahoo.com/dailynews/rss/business/*http%3A//news.yahoo.com/s/nm/20120126/bs_nm/us_caterpillar

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FedEx employee charged for bomb joke on Army base (AP)

SALT LAKE CITY ? Prosecutors in Utah charged a FedEx driver with a threat of terrorism count over allegations he joked that a package he was delivering to a Utah Army base was likely a bomb.

Charges filed Wednesday in Salt Lake City show the deliveryman was dropping off a package on Sept. 20 addressed to an Army Corps of Engineers employee at Camp Williams.

Prosecutors say that when a woman asked him what it was, he replied that it was probably a bomb. Military police then evacuated 215 people from the building and the surrounding area.

The Deseret News identified the driver as 27-year-old Kevin Coleman.

Police say the man later told them his comment was a mistake.

He's charged with a third-degree felony count of threat of terrorism.

Source: http://us.rd.yahoo.com/dailynews/rss/usmilitary/*http%3A//news.yahoo.com/s/ap/20120126/ap_on_re_us/us_bomb_joke_gone_wrong

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Sony Walkman Z Series Mobile Media Player

Sony has extended their Walkman product line with the Z Series Mobile Media Player.? This Android 2.3 powered Mobile Media Player has a 4.3? touch screen, runs on a dual core mobile processor, has built-in WiFi / Bluetooth, micro HDMI port, and has Sony?s S-Master MX audio technology to deliver a crisp audio experience.? It [...]

Source: http://the-gadgeteer.com/2012/01/24/sony-walkman-z-series-mobile-media-player/

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Senate Legislation Targets Aggressive Recruiting Of Veterans By For-Profit Colleges

Over the past two years, for-profit colleges have been aggressively recruiting returning veterans in an effort to tap into billions of dollars in federal benefits available for soldiers to pay for college.

Not only have the schools have been eager to capture a new source of revenues, but former soldiers represent an added benefit for the industry: a way to secure more federal student loan and grant money.

By law, for-profit colleges must come up with at least 10 percent of their revenue from sources other than federal student aid programs in order to keep that money flowing.

The 90 percent threshold, known as the 90/10 rule, was put in place to ensure that at least 10 percent of the revenues at for-profit schools would come from the private sector, according to congressional testimony and reports from the early 1990s.

Yet many schools are complying with the requirement for private funds by dipping into a separate government revenue stream: educational benefits given to former military personnel.

The military subsidies, part of the new GI bill passed by Congress in 2008, aren't technically considered federal student aid funds, which gives corporations an incentive to actively pursue veteran enrollments.

Sen. Richard Durbin (D-Ill.) on Monday said he will propose legislation that would prevent for-profit colleges from counting the military assistance money as private funding. He, along with Sen. Tom Harkin (D-Iowa), plans to introduce the measure this week.

Durbin's legislation would, for the purpose of for-profit colleges, consider any benefits from the GI bill and the Department of Defense tuition-assistance program to be federal student aid revenues. The bill would also lower from 90 percent to 85 percent the amount of money that schools can receive from the federal government.

Lawmakers and advocacy groups say current practices have resulted in many returning veterans being steered into high-cost programs of dubious value.

Since the GI bill went into effect in 2009, it has "inadvertently created a federal bonus for the for-profit schools," Durbin told HuffPost.

"For-profit college companies have created aggressive marketing plans and a sales force specifically designed to target and enroll as many veterans, service members and family members as possible," Durbin said at a Monday forum on for-profit colleges and veteran enrollment in Chicago.

QUESTIONS ABOUT OUTCOMES

Trade groups representing for-profit colleges say that their schools are providing flexible course offerings and crucial career training for veterans returning from duty.

"Career colleges are proud to offer members of the military and veterans access to higher education and job training for in-demand careers," Penny Lee, managing director of the Coalition for Educational Success, an industry lobbying group, said in a statement.

Yet veterans advocates argue that the GI bill has created perverse incentives for the industry to prey on soldiers. Holly Petraeus, who handles military affairs issues at the Consumer Financial Protection Bureau, appeared with Durbin at Monday's forum and has raised concerns at past Senate hearings.

"Unfortunately, I think military folks at this point are seen like a dollar sign wearing a uniform for many recruiters in a for-profit model," she said at a hearing in July. "They're seen as cash that enables them to sell more of their product, and that's unfortunate," added Petraeus, who is married to CIA director and former Army General David Petraeus.

For-profit colleges are, on average, nearly twice as expensive as public four-year universities and cost nearly five times as much as public community colleges. But the expense of obtaining a college degree at a for-profit institution isn't necessarily translating into success in the workplace. A recent report by Harvard researchers found that students exiting for-profit colleges are more likely to be unemployed in the years after graduation than are those finishing traditional universities.

For-profit schools have higher graduation rates than public community colleges for short-term programs of two years and less but have significantly lower graduation rates for bachelor's degree programs.

While questions have been raised about whether these schools truly serve former military personnel, the institutions themselves have much to benefit from obtaining military subsidies.

PUBLIC FUNDS FUEL FOR-PROFIT SCHOOLS

The stakes involved are enormous for the for-profit college industry. For-profit institutions have struggled to find students willing to put up their own money for their programs but have ended up attracting mostly lower-income students who require federal aid. In order to create a private stream of revenue to comply with the 90/10 law, some schools have even gone so far as to increase tuition for some of their programs so that students must find outside private loans beyond what they receive from the government.

Complying with the law has become a central concern of higher-education companies and their shareholders. On quarterly earnings calls, executives at for-profit college companies are constantly quizzed about compliance with the law, and many have referenced the veteran-recruiting strategy in public filings with the Securities and Exchange Commission.

Internal documents from Kaplan University provided to Senator Harkin's staff showed a list of objectives related to recruiting of military, including "Grow our military enrollments to 9K per year by 2011" and "Improve 90/10 by 5 %." Among the strategies to achieve these goals were "Drive awareness via print advertising in key military publications and targeting key military installations."

As things stand today, many of the largest for-profit colleges receive more than 85 percent of their revenues from federal student aid programs, not counting military benefits. The Apollo Group, which owns the University of Phoenix, noted in a recent filing that 86 percent of its cash revenues came from federal student aid subsidies.

The Washington Post Co., which owns Kaplan University, another major industry player, said in a quarterly filing that a number of its schools could be in violation of the 90/10 rule this year, based on recent enrollment trends. Because of this, several Kaplan-run schools could be at risk of losing access to their federal funds, according to the filing.

In general, for-profit college corporations are enormous beneficiaries of government aid, relying almost entirely on the federal government for revenues and profits. In 2010, the industry took in more than $30 billion in federal student loan and Pell Grant dollars. And the eight largest for-profit college corporations received more than a half-billion dollars in veterans' assistance money from the Post-9/11 GI Bill during the 2010-11 school year.

Overall, for-profit colleges received nearly 40 percent of the $4.4 billion money given out under the GI bill program since 2009, despite educating only a quarter of the veterans using those benefits. By contrast, public colleges instructed 59 percent of the veterans and took in 40 percent of the GI bill money.

PROSPECTS FOR REFORM

Durbin will find that obtaining support for his bill will be a tough task,
as most Republicans in Congress have traditionally been strong backers of for-profit colleges. The current House speaker, John Boehner, was a strong supporter of eliminating the 90/10 rule when he chaired the House Education and Workforce Committee from 2001 to 2006.

The for-profit college industry has also hired many Democratic lobbyists in recent years, including former House Speaker Dick Gephardt, and lawmakers on the left have increasingly come to the aid of the industry. Lee, who heads the industry trade group, was a former top adviser to Senate Majority Leader Harry Reid and a senior staff member on the Democratic National Committee.

"The industry is going to fight tooth and nail," Durbin said. "There's so much money at stake here -- millions if not billions of dollars."

Related on HuffPost:

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Source: http://www.huffingtonpost.com/2012/01/24/for-profit-colleges-veterans_n_1224407.html

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