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)

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Morsi Spokesman Tries to Clarify Military Order

Petr David Josek/Associated Press

Demonstrators camping out in Cairo's Tahrir Square on Monday.

CAIRO — A day after President Mohamed Morsi formally directed the military to help keep public order and authorized soldiers to arrest civilians, a spokesman on Monday sought to draw distinctions between the order and the forms of martial law that the Egyptian Army had previously imposed.

The spokesman, Khaled al-Qazzaz, said the president empowered the military for the limited purpose of protecting polling stations during Saturday’s constitutional referendum. He also said the president had instructed the army to refer any civilians arrested by soldiers to a civilian court for trial, instead of military tribunals, reversing the blanket authorizations that the Egyptian military has long demanded when it takes on a policing role in the streets.

“This is very different from what happened under the SCAF,” said Mr. Qazzaz, referring to the Supreme Council of the Armed Forces, which ruled Egypt after President Hosni Mubarak was ousted and until Mr. Morsi took office. “There will be no military trials.”

But Heba Morayef, a researcher with Human Rights Watch, noted that the text of the order allowed the military to keep taking civilians to military courts. “Had he wanted to,” Ms. Morayef said, “President Morsi could have stipulated that the military’s jurisdiction would have been limited in this case and that every civilian will be referred to a civilian court, but he chose not to.”

Mr. Morsi’s latest assurances were unlikely to comfort his growing cast of opponents, who have taken to the streets in large numbers repeatedly since late November, when he issued a decree putting his decisions above the law. The president was forced to rescind most of his decree, but he has not budged on a central opposition demand: that he cancel the Saturday referendum on the constitutional draft.

Faced with the possibility of the vote, Egypt’s opposition parties on Monday were weighing their approach to the referendum and said they would continue to hold large protests. The biggest opposition coalition, the National Salvation Front, said it would announce Tuesday whether it would call for a boycott of the referendum, or instead urge the public to vote down the draft charter, which opposition groups have criticized as deeply flawed and written by a panel representing narrow, Islamist interests.

There appeared to be divisions and flux within the opposition. On Sunday, the opposition used language that seemed to favor a boycott, saying in a statement that it rejected “lending legitimacy to a referendum that will definitely lead to more sedition and division.” But in an interview broadcast Monday, the coalition’s coordinator, Mohamed ElBaradei, said: “We might go to the vote.”

During the interview with Christiane Amanpour of CNN, Mr. ElBaradei, the former chief of the International Atomic Energy Agency, urged Mr. Morsi to delay the referendum for a few months, saying that the draft constitution — a “sham,” he called it — did not adequately protect women, freedom of expression or religion.

Mr. ElBaradei asserted that at least half of the country harbored similar reservations about the charter, and insisted that the opposition’s tactics — holding large protests and raising the possibility of a boycott — were not just obstructionism by groups who have struggled to mount a credible challenge to the better-organized Islamist groups.

“We are at a cross in the road,” he said. “It’s not that we’re fighting for the sake of fighting. It’s not that we’re sore losers.”

Mr. ElBaradei left open several possible courses of action, including a boycott. “If need be, we probably will go to the polls and make sure the document will not pass. Even if it will pass, we will continue to fight.”

There were other signs of momentum toward a highly contested vote on Saturday. The April 6th Revolutionary Youth Group, which is not a member of the coalition but coordinates activities with the National Salvation Front, began a campaign urging a no vote, called “Your Constitution does not represent us.”

A group representing administrative court judges said its members would supervise the referendum, under certain conditions, demanding a secure environment and even life insurance policies for judges, possibly smoothing the way for a credible contest. Other judges’ groups have said they would boycott the vote. A spokesman for the Muslim Brotherhood, the Islamist party that forms the primary base of Mr. Morsi’s support, said on Monday that they believed a sufficient numbers of judges had agreed to supervise the polls, ensuring that the vote could go forward.

Mayy El Sheikh contributed reporting from Cairo.

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Behind the New Modern Seinfeld Twitter Account, Which Is Not About Nothing

Seinfeld has never left our pop culture lexicon. Just recently we’ve seen it referenced in the presidential race and in Game of Thrones parodies. But what would the seminal “show about nothing” be like if its characters could use cell phones or Facebook? The @SeinfeldToday Twitter account, which popped up Sunday evening, ventures to propose of-the-moment plots for a modern Seinfeld. For example:  

Kramer is under investigation for heavy torrenting. Jerry’s new girlfriend writes an extremely graphic blog. George discovers Banh Mi.

— Modern Seinfeld (@SeinfeldToday) December 10, 2012

The man behind the account, BuzzFeed’s sports editor Jack Moore, started tweeting out scenarios with his friend, comedian Josh Gondelman, and then decided that the joke merited its own account. Moore is a Seinfeld fanatic himself: “I’m pretty much constantly watching episodes in the background while I’m doing anything,” he told us in an email. “I have a thumb drive with the whole series on it that I keep in my bag pretty much all the time.” 

RELATED: Rich Folks, Saggy Pants, and the Vast Manatee Conspiracy

So far, the modern-day episode summaries ring true, despite warnings from Gawker last year that classic episodes wouldn’t have worked if the characters just had the use of newfangled technology. “It would be different but not as different as everyone acts like,” Moore wrote to us. “People always say that ‘if they had cell phones Seinfeld couldn’t exist,’ which is true for a certain type of Seinfeld episode, but not as a general rule (which I think the account shows).” 

RELATED: Jon Huntsman Finds His Voice by Sounding Like a Dad on Twitter

The account makes it obvious that Internet apps and 2012 trends would create the same awkward situations that Seinfeld thrived on. For example: 

Kramer uses grinder to meet new friends, doesn’t know it’s a gay hook-up app. Jerry refuses to admit he cried on @wtfpod.

— Modern Seinfeld (@SeinfeldToday) December 10, 2012

Elaine has a bad waiter at a nice restaurant, her negative Yelp review goes viral, she gets banned. Kramer accidentally joins the Tea Party.

— Modern Seinfeld (@SeinfeldToday) December 10, 2012

George thinks his GF is faking a gluten-intolerance, feeds her real cookies, sending her to the ER. Autocorrect ruins Jerry’s relationship.

— Modern Seinfeld (@SeinfeldToday) December 10, 2012

We kind of really want to see some of these made, actually. Reunion special? 

Social Media News Headlines – Yahoo! News

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Hayden Panettiere Splits with Scotty McKnight

12/10/2012 at 07:50 PM EST

Hayden Panettiere and Scotty McKnight

Splash News Online

Is there a tear in her beer?

Nashville star Hayden Panettiere has broken up with her boyfriend of more than a year, New York Jets wide receiver Scotty McKnight, a source confirms to PEOPLE.

But the split doesn't appear to be the stuff of a sad country song. The actress, 23, is still friends with McKnight, 24, and one source tells TMZ that their pals wouldn't be surprised if they got back together.

This is Panettiere's second go at a relationship with an athlete. Before dating McKnight she was with Ukrainian boxer Wladimir Klitschko for about two years.
– Julie Jordan

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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.

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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>)

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Damascus Is Tested as Clashes Draw Near

Muzaffar Salman/Reuters

A member of Syria's symphony orchestra ahead of a concert in Damascus in November.

DAMASCUS, Syria — Business has been terrible for Abu Tareq, a taxi driver, so last week, without telling his wife, he agreed to drive a man to the Damascus airport for 10 times the usual rate. But, he said later, he will not be doing that again.

On the airport road, he could hear the crash of artillery and the whiz of sniper fire. Dead rebels and soldiers lay on the roadsides. Abu Tareq saw a dog eating the body of a soldier.

“I will never forget this sight,” said Abu Tareq, 50, who gave only a nickname for safety reasons. “It is the road of the dead.”

Damascus, Syria’s capital, is one of the world’s oldest continuously inhabited cities, a touchstone of history and culture.

Through decades of political repression, the city preserved, at least on the surface, an atmosphere of tranquillity, from its wide downtown avenues to the spacious, smooth-stoned courtyard of the Umayyad Mosque and the vine-draped alleys of the Old City, where restaurants and bars tucked between the storehouses of medieval merchants hummed with quiet conversation.

Now, though, the rumble of distant artillery echoes through the city, and its residents are afraid to leave their neighborhoods. Cocooned behind rows of concrete blocks that close off routes to the center, they huddle in fear of a prolonged battle that could bring destruction and division to a place where secular and religious Syrians from many sects — Sunni, Shiite, Alawite, Christian and others — have long lived peacefully.

For more than a week, Syrian rebels and government forces have fought for the airport road, as the military tries to seal off the capital city, the core of President Bashar al-Assad’s power, from a semicircle of rebellious suburbs. Rebels have now kept the pressure on the government for as long as they did during their previous big push toward Damascus last summer. This time, improved supply lines and tactics, some rebels and observers say, may provide a more secure foothold.

But the security forces wield overwhelming firepower, and while they have been unable to subdue the suburbs, some rebel fighters say they lack the intelligence information, arms and communication to advance. That raises the specter of a destructive standoff like the one that has devastated the commercial hub of Aleppo.

“Damascus was the city of jasmine,” Mahmoud, 40, a public-school teacher, said in an interview in the capital. “It is not the city I knew just a few weeks ago.”

Car bombs have ripped through neighborhoods, the targets and attackers only guessed at. Checkpoints choke traffic, turning 20-minute jaunts into three-hour ordeals. Wealthy residents find it quicker and safer to drive to Beirut, Lebanon, for a weekend trip than to the Old City.

Shells have been fired from Mount Qasioun overlooking Damascus, a favorite destination from which to admire the city’s sparkling lights. West of downtown, where the presidential palace stands on a plateau, things are relatively quiet.

Mahmoud, unable to find heating oil and medicine for his sick wife, said his grocer has lectured him daily on shortages and soaring prices. The once-ubiquitous government, he said, now appears to have no role beyond flooding streets with soldiers and security officers, “who are sometimes good and sometimes rude.”

People with roots in other towns have left, he said, “but what about me, who is a Damascene, and has no other city?”

The sense of claustrophobia has grown as rebels have declared the airport a legitimate target and the government has blocked Baghdad Street, a main avenue out of the city. On Sunday, it blocked the highway to Dara’a.

In some outlying neighborhoods and nearby suburbs, the front lines seem to be hardening.

On the route into Qaboun, a neighborhood less than two miles from the center of Damascus, the last government checkpoint in recent days was near the municipal building. Less than a quarter-mile on, rebels controlled the area around the Grand Mosque.

An employee of The New York Times reported from Damascus, and Anne Barnard from Beirut, Lebanon. Neil MacFarquhar contributed reporting from Beirut.

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Amazon’s Android Appstore explodes, downloads increase 500% over last year

Amazon’s (AMZN) Appstore is on fire. While the marketplace may not boost as many apps as Google’s (GOOG) Play Store, it has seen substantial growth in the past year. In fact, the company announced on Thursday that its Appstore has seen downloads increase more than 500% since last year. Amazon also revealed that the number of developers utilizing in-app purchasing doubled in the third quarter and that 23 of the top 25 grossing apps now incorporate the technology.

“Amazon offers the best end-to-end solution for app and game developers,” said Aaron Rubenson, Director of Amazon Appstore for Android. “Developers can use Amazon Web Services’ building blocks as the infrastructure for their games. To enhance customer engagement, they can add features like GameCircle’s Leaderboards, Achievements, Friends, and Whispersync. Amazon’s In-App Purchasing allows developers to generate additional income. Finally, since discovery can be a major challenge for app developers, we’re providing more and more ways to help developers reach customers on Amazon, Kindle Fire devices, and in our Appstore. We’re working hard to make lives easier for developers, and to give them more ways to grow their business.”

The success of Amazon’s Appstore is directly related to the success of its Kindle Fire line of tablets. Unlike most Android devices, the Kindle Fire does not include access to Google Play and instead must rely solely on Amazon’s offering for content and applications.

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Wireless News Headlines – Yahoo! News

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Tim McGraw and Faith Hill Kick Off Special Series of Las Vegas Shows

By Mark Gray

12/09/2012 at 05:00 PM EST

Tim McGraw and Faith Hill

Denise Truscello/WireImage

Tim McGraw and Faith Hill looked at each other, their hands on each others knees and shared a passionate kiss just after midnight Sunday morning.

The moment was a long time coming – it capped off their first weekend as a Las Vegas headlining act.

Earlier in the 90 minute show, McGraw told the crowd at the Venetian that he and his wife were going to "have fun tonight" and it genuinely seemed like they did, singing with each other for several songs while still letting the other perform their solo hits. Though the show – called the Soul2Soul series – is technically not the same "residency" show Las Vegas is known for, the couple will perform for 10 weekends through April.

At a press conference several months ago, McGraw and Hill promised a "personal" show, and they delivered in a big way. In fact, it got very personal as McGraw complimented his wife on her flowing black dress, saying, "It's gonna look good on the floor later."

The duo also took a moment to sit down and speak with the crowd. Though they didn't field any questions, they spoke about the most common questions they get asked. "We always get asked what was the music we heard first, who influenced us," Hill said.

Rather than answer it, the duo then sing a few of their main influences – Hill sang George Strait; McGraw sang The Eagles.

"I love doing other people's music, better than my own," McGraw joked.

With few bells and whistles, the show puts the focus squarely on it's two superstars, and considering the rousing ovations McGraw and Hill received Saturday, that's perfectly fine with their fans.

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Smokers celebrate as Wash. legalizes marijuana

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

___

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

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