Wall Street Week Ahead: “Fiscal cliff” blues may lead to correction

NEW YORK (Reuters) – Wall Street‘s post-election sell-off may gather steam in the coming weeks as worries mount about the looming “fiscal cliff” and technical weakness suggests a possible correction ahead.

The benchmark Standard & Poor’s 500 <.SPX> closed below its 200-day moving average – a measure of the market’s long-term trend – on Thursday for the first time in five months, and ended below it again on Friday. More than half of the Dow components are trading below key technical levels.

“I don’t think you have to panic here, but I think you really want to be looking for the market to move lower for the next couple of months,” said Frank Gretz, market analyst and technician for Wellington Shields & Co., a brokerage in New York. “I think the next rally is the rally you want to sell.”

At the heart of the market’s worry is whether U.S. leaders can come to agreement on some $ 600 billion in spending cuts and tax increases that are due to kick in early next year. Some fear dramatic cutbacks could send the U.S. economy into another recession.

The prospect of higher tax rates in 2013 is driving investors to sell shares as they seek to decrease the tax impact from their positions this year and next.

“You would have thought the fiscal cliff scenarios would have been already mulled over and priced in, but they weren’t. It’s almost like the market has ADD and can only focus on one thing at a time,” said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, whose firm manages about $ 13 billion in assets.

The S&P 500 fell 2.4 percent for the week, its worst weekly percentage drop since June. The index is now down 6.4 percent from its intraday high for the year of 1,474.51 reached on September 14. That drop puts the benchmark index below its 50-day moving average, but not yet into correction territory, defined as a 10 percent drop from a peak.

READING THE TECHNICAL SIGNS

The S&P 500 has been trading in a range between the 50-day moving average of 1,433.50 and the 200-day moving average of 1,380.98 for about two weeks. A significant break below that lower level could be a precursor to further weakness, analysts said.

“There’s a technical breakdown in the market that indicates further losses,” said Adam Sarhan, chief executive of Sarhan Capital in New York. “A 10 percent drop is the next big line in the sand.”

The primary driver of stock prices in coming weeks looks likely to be investor concern about the U.S. fiscal situation.

In a sign of the risks involved, comments by President Barack Obama on Friday about the upcoming negotiations caused stocks to sharply cut their gains.

The president, who defeated Republican candidate Mitt Romney in Tuesday’s U.S. election, outlined a position for the fiscal issues on Friday that is far apart from that of his political opponents, suggesting a long battle is to come.

“If the market anticipates a resolution to the fiscal cliff or Europe or any of the other bricks in the wall of worry, we could easily take off,” Sarhan said.

Seventeen of the Dow’s 30 components are trading below both their 50-day and 200-day moving averages, while another eight are under their 50-day levels, but not their 200. Only five components – Bank of America , JPMorgan Chase & Co , Home Depot Inc , Johnson & Johnson and Travelers Cos – are above both support levels.

Another big negative for the market has been heavy selling of Apple shares. The stock of the world’s biggest company, ranked by market capitalization, lost 5.2 percent this week, weighing heavily on both the S&P 500 and the Nasdaq <.IXIC>. The stock is down 22.4 percent from its September 21 all-time intraday high of $ 705.07.

BIG RETAILERS’ REPORT CARDS

The election and fiscal cliff concerns, which came on the heels of Superstorm Sandy and its devastating effects on many parts of the U.S. Northeast, have captured so much attention that they’ve overshadowed weakness coming from third-quarter earnings.

With results in from 449 of the S&P 500 companies, third-quarter earnings now are estimated to have declined 0.3 percent from a year ago, which is slightly better than the forecast at the start of the reporting period. Results have been especially weak on the revenue side, however, with just 38 percent of companies beating on sales, Thomson Reuters data showed.

But recent stronger economic data, including a report on Friday showing consumer sentiment at more than a five-year high in early November, suggests that retailers, many of which have yet to report, could be among the stronger performers this earnings period.

Next week, results are expected from such big names as Target , Wal-Mart and Home Depot.

Consumer discretionary companies have outperformed the broader S&P 500 in earnings, with 72 percent of the companies in that sector beating analysts’ expectations, compared with 63 percent for the S&P 500 as a whole.

Investors will be paying close attention to those results with the holiday shopping period around the corner, said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey, which oversees about $ 1 billion in assets.

“It’s really the beginning of the Christmas sell season, and I think there’s going to be a lot of interest with the outlook for that season and how promotional companies are going to be,” Meckler said.

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: caroline.valetkevitch(at)thomsonreuters.com )

(Reporting by Caroline Valetkevitch and Ryan Vlastelica; Editing by Jan Paschal)

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Assad says will live and die in Syria

DOHA (Reuters) – President Bashar al-Assad said he would “live and die” in Syria and warned that any Western invasion to topple him would have catastrophic consequences for the Middle East and beyond.

Assad’s defiant remarks coincided with a landmark meeting in Qatar on Thursday of Syria’s fractious opposition to hammer out an agreement on a new umbrella body uniting rebel groups inside and outside Syria, amid growing international pressure to put their house in order and prepare for a post-Assad transition.

The Syrian leader, battling a 19-month old uprising against his rule, appeared to reject an idea floated by British Prime Minister David Cameron on Tuesday that a safe exit and foreign exile for the London-educated Assad could end the civil war.

“I am not a puppet. I was not made by the West to go to the West or to any other country,” he told Russia Today television in an interview to be broadcast on Friday. “I am Syrian; I was made in Syria. I have to live in Syria and die in Syria.”

Russia Today’s web site, which published a transcript of the interview conducted in English, showed footage of Assad speaking to journalists and walking down stairs outside a white villa. It was not clear when he had made his comments.

The United States and its allies want the Syrian leader out, but have held back from arming his opponents or enforcing a no-fly zone, let alone invading. Russia has stood by Assad.

The president said he doubted the West would risk the global cost of intervening in Syria, whose conflict has already added to instability in the Middle East and killed some 38,000 people.

“I think that the price of this invasion, if it happened, is going to be bigger than the whole world can afford … It will have a domino effect that will affect the world from the Atlantic to the Pacific,” the 47-year-old president said.

“I do not think the West is going in this direction, but if they do so, nobody can tell what is next.”

QATAR, TURKEY CHIDE OPPOSITION

Backed by Washington, the Doha talks underline Qatar’s central role in the effort to end Assad‘s rule as the Gulf state, which funded the Libyan revolt to oust Muammar Gaddafi, tries to position itself as a player in a post-Assad Syria.

Qatari Prime Minister Hamad bin Jassim Al Thani urged the Syrian opposition to set its personal disputes aside and unite, according to a source inside the closed-door session.

“Come on, get a move on in order to win recognition from the international community,” the source quoted him as saying.

Turkish Foreign Minister Ahmed Davutoglu delivered a similar message, saying, according to the source: “We want one spokesman not many. We need efficient counterparts, it is time to unite.”

An official text of a speech by Qatari Foreign Minister Khalid Mohamed al-Attiyah showed he told the gathering: “The Syrian people awaits unity from you, not divisions … Your agreement today will prove to the international community that there is a unity … and this will reflect positively in the international community’s stance towards your fair cause.”

Across Syria, more than 90 people were killed in fighting on Thursday, the Syrian Observatory for Human Rights said.

In Turkey’s Hatay border province, two civilians, a woman and a young man, were wounded by stray bullets fired from Syria, according to a Turkish official. Turkish forces increased their presence along the frontier, where officials have said they might seek NATO deployment of ground to air missiles.

Syria poses one of the toughest foreign policy challenges for U.S. President Barack Obama as he starts his second term.

International rivalries have complicated mediation efforts. Russia and China have vetoed three Western-backed U.N. Security Council resolutions that would have put Assad under pressure.

Syria’s conflict, pitting mostly Sunni Muslim rebels against forces dominated by Assad’s Alawite minority, whose origins lie in Shi’ite Islam, has fuelled sectarian tensions across the Middle East. Sunni Arab countries and Turkey favor the rebels, while Shi’ite Iran backs Assad, its main Arab ally.

“VICIOUS CIRCLE”

The main opposition body, the Syrian National Council (SNC), has been heavily criticized by Western and Arab backers of the revolt as ineffective, run by exiles out of touch with events in Syria, and under the sway of the Islamist Muslim Brotherhood.

British Foreign Minister William Hague said London would now talk to rebel groups inside Syria, after U.S. Secretary of State Hillary Clinton last week criticized the SNC and called for a new opposition body to include those “fighting and dying”.

But the plan for a body that could eventually be considered a government-in-waiting capable of winning foreign recognition and therefore more military backing ran into trouble almost as soon as it was proposed by SNC member Riyad Seif.

The meeting has so far been bogged down by arguments over the SNC representation and the number of seats the rival groups – which include Islamists, leftists and secularists – will have in a proposed assembly. Seif said he hoped for agreement on that on Thursday night, although the talks may continue into Friday.

Senior SNC member Burhan Ghalioun said the participants were moving towards consensus: “The atmosphere was positive. We all agree that we don’t want to walk away from this meeting in failure,” he told reporters.

Seif’s proposal is the first concerted attempt to merge opposition forces to help end the devastating conflict.

The initiative would also create a Supreme Military Council, a Judicial Committee and a transitional government-in-waiting of technocrats – along the lines of Libya’s Transitional National Council, which managed to galvanize international support for its successful battle to topple Gaddafi.

Michael Doran of the Brookings Institute in Washington told a forum in Doha it would not work for Syria. “It’s not a ridiculous idea, but it’s not going to succeed,” he said.

A diplomat on the sidelines of the talks said international divisions in the U.N. Security council did not help.

“It’s a vicious circle. They are asking the opposition to unite when they admit they are not themselves united,” he said.

(Writing by Tom Perry and Samia Nakhoul; Editing by Alistair Lyon, Alastair Macdonald and Philippa Fletcher)

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US video game sales drop 25 percent in October

NEW YORK (AP) — A research firm says U.S. retail sales of new video game hardware, software and accessories fell 25 percent in October.

The drop marks the 11th straight month of declining sales for physical game products. Many gamers are waiting for big holiday releases such as Activision Blizzard Inc.‘s “Call of Duty: Black Ops II.”

The NPD Group said Thursday that sales fell to $ 755.5 million from $ 1 billion a year earlier.

Sales of video games themselves, excluding PC titles, fell 25 percent to $ 432.6 million. Sales of hardware such as Microsoft’s Xbox 360 fell 37 percent to $ 187.3 million. Sales of accessories, meanwhile, grew 5 percent to $ 135.6 million.

NPD estimates that retail sales account for about half of all video game spending. The rest is downloads, apps and the like.

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“Twilight” fans camp out days ahead of “Breaking Dawn-Part 2″

LOS ANGELES (Reuters) – Dozens of excited “Twilight” fans set up tents in Los Angeles on Thursday ahead of next week’s world premiere of the last film in the vampire romance franchise.

Some 2,200 people from all over the world have registered to camp on a concrete plaza outside a downtown Los Angeles movie theater, movie studio Summit Entertainment said.

The fans – most of them young women – will get guaranteed spots to see stars Kristen Stewart, Robert Pattinson and Taylor Lautner walk the red carpet for the November 12 premiere of “The Twilight Saga: Breaking Dawn – Part 2.”

Summit has laid on special activities during the five day wait, including a marathon screening of the four other films in the blockbuster franchise, surprise appearances from some cast members, and a “Twilight”-themed workout.

“We figured it was a once in a lifetime opportunity for some of us. This is the last movie. We’re never going to get to do it again and we wanted to hang out with some of our friends for the last one,” Bri-Anne Glover told Reuters Television as she settled in at the camp on Thursday.

“I love ‘Breaking Dawn’ because that’s kind of where I am in my life. I’ve got the husband, I’ve got my children, and we’re getting on with our lives and having a happy life and the same with Edward and Jacob and Bella,” said fan Eryka Bradford.

The “Twilight” books by author Stephenie Meyer have been a publishing sensation and the four movies have made more than $ 2.5 billion combined at box offices worldwide.

The final film sees the bliss of newlyweds Bella (Stewart) and Edward (Pattinson) and their daughter threatened by an ancient vampire coven.

“The Twilight Saga: Breaking Dawn – Part 2″ opens in several European countries on November 14 and arrives in U.S. movie theaters on November 16.

(Reporting by Lindsay Claiborn, editing by Jill Serjeant)

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Iron, omega-3s tied to different effects on kids’ brains

NEW YORK (Reuters Health) – For children with low stores of two brain-power nutrients, supplements may have different, and complex, effects, a new clinical trial suggests.

Iron deficiency is the most common nutritional deficiency worldwide, affecting about 2 billion people, according to the World Health Organization.

Poor children in developing countries are at particular risk for shortfalls in iron, as well as other nutrients, including the omega-3 fats found largely in oily fish.

So the new study looked at the effects of giving 321 schoolchildren in South Africa either supplements containing iron, omega-3s or both. All of the kids had low levels of both nutrients, which are vital for children’s growth and healthy brain development.

After about eight months, researchers found varied changes in the kids’ memory and learning abilities.

In general, children given iron showed improvements on tests of memory and learning. That was especially true if they had outright anemia – a disorder wherein the blood’s oxygen-carrying capacity is reduced, causing problems like fatigue and difficulty with concentration and memory.

For example, on a memory test, anemic kids given iron were able to recall an extra two words out of 12.

In contrast, there was no overall benefit linked to omega-3 supplements. And when the researchers zeroed in on kids with anemia, those who used omega-3s did worse than before on one test of memory.

Then there were the children with clear iron deficiency, but not anemia. Of those kids, girls who got omega-3s fared worse, while boys improved their test scores.

What it all means for kids with nutritional deficiencies is unclear, according to lead researcher Jeannine Baumgartner, of North-West University in Potchefstroom, South Africa.

One limitation of the study, she said in an email, is that the number of children in each group her team analyzed was small. There were 67 kids with anemia, for example.

Thus, “the results need to be interpreted cautiously,” Baumgartner told Reuters Health in an email.

There are still a lot of questions, according to Baumgartner, whose group’s findings are published in the American Journal of Clinical Nutrition.

The children in this study were 6 to 11 years old. But, Baumgartner said, animal research suggests brain deficits that take shape early in life might not be reversible.

“The question arises whether supplementation during school age might be too late to achieve beneficial effects on cognitive performance,” she said.

Still, the omega-3 findings are consistent with some recent animal research. Baumgartner said her team found that in rats deficient in both iron and omega-3s, giving either supplement alone seemed to worsen the animals’ memory performance. The picture was better, though, when the rats were given both iron and omega-3s.

In children, things are more complicated. Other nutritional deficiencies, as well as exposure to toxins like lead and the general effects of poverty could all dampen kids’ brain development, Baumgartner pointed out.

“We believe that more research is needed to investigate the biological and functional links between nutrients essential for brain development and cognitive functioning,” she said.

Since this study focused on impoverished children with low iron, and possibly other nutritional deficiencies, the results cannot be extended to children in general, according to Baumgartner.

In the U.S., recommendations call for babies to get an iron test during the first year of life to check for deficiencies. For healthy kids older than six months, the recommended iron intake varies from 7 to 15 mg of iron per day, depending on their age and sex.

There is a risk from getting too much iron and experts tell parents to ask their doctor before giving children iron supplements.

The current study was partly funded by Unilever, which makes omega-3-enriched spreads. Paul Lohmann GmbH provided the iron supplements, and Burgerstein AG provided the omega-3s.

SOURCE: http://bit.ly/RIna8G American Journal of Clinical Nutrition, online October 24, 2012.

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Exclusive: Schulze’s Best Buy bid seen in December, below $8 billion range

NEW YORK (Reuters) – An eventual bid for Best Buy Co Inc by founder Richard Schulze could come below his initial proposal of around $ 8 billion and is now not expected to be made before December, sources familiar with the matter said, in a new twist to the months-long saga at the struggling electronics retailer.

Schulze has done most of his due diligence on Best Buy and has formed a business plan to turn around the world’s largest consumer electronics chain, with his efforts now focused on securing financing commitments, the sources said.

At least three private equity firms – Apollo Global Management LLC, TPG Capital LP and Leonard Green & Partners LP – are considering joining Schulze in the bid, the sources said. Cerberus Capital Management LP, which was among the buyout firms that weighed joining the bidding group, is no longer working on the deal, one of the four sources said.

The sources declined to be identified because the information is not public.

Schulze said in August he could buy Best Buy for $ 24 to $ 26 per share, valuing the deal between $ 8.16 billion and $ 8.84 billion and if debt is included, as much as $ 10.9 billion.

But Best Buy’s shares have since fallen 24 percent to trade around $ 15.

While a final decision on the offer price has not been made, the drop in shares has raised the likelihood that Schulze’s bid could be below $ 24 per share, the sources said.

Schulze is expected to take a 30-day extension to mid-December for submitting a final proposal to Best Buy’s board, they said.

The consortium’s efforts to clinch equity and debt commitments for what could be one of the largest leveraged buyouts of the year were delayed by superstorm Sandy which disrupted operations at several major Wall Street banks.

An extension will also give Schulze and the buyout firms a chance to see how Best Buy is performing in the crucial Christmas holiday season, the sources said.

Best Buy and Apollo declined to comment. The other private equity firms could not be reached for comment.

Best Buy has seen its fortunes falter over the years, as consumers increasingly use its big box stores as showrooms for products they end up buying online at Amazon and other websites. To add to its troubles, the company forced out Schulze’s protegy Brian Dunn as CEO earlier this year amid allegations the executive was having an inappropriate relationship with a female employee.

That scandal also led to the ouster of Schulze, who founded the company in 1966, from the board, and to Best Buy hiring turnaround expert Hubert Joly as its CEO to come up with its own restructuring plan.

In October, the retailer, which has suspended its profit forecasts and share buybacks for the rest of the year, warned that earnings and same-store sales would fall in the third quarter. Joly plans to meet investors in New York on Tuesday to unveil his turnaround plan.

One analyst has said that Best Buy’s declining fortunes could make a buyout more attractive for some investors.

“We are starting to believe that current shareholders may be more receptive to Schulze’s previously disclosed offer of $ 24-$ 26 per share than we previously believed,” Morningstar analyst R.J. Hottovy said late last month.

There are no guarantees, however, that Schulze will ultimately be able to table an offer or that his eventual bid will be as attractive to shareholders.

Schulze has said he plans to fund any deal through a combination of private equity and debt financing, as well as the reinvestment of some of his own equity in the company.

(Reporting by Soyoung Kim, Olivia Oran and Dhanya Skariachan, Editing by Paritosh Bansal and Edwina Gibbs)

(This story was fixed to correct syntax in headline)

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Ghana building collapse traps dozens, kills 1

ACCRA, Ghana (AP) — A five-story shopping center built earlier this year in a bustling suburb of Ghana‘s capital collapsed Wednesday, killing at least one person and leaving several dozen people trapped in the rubble, authorities and eyewitnesses said.

Rescue crews used cranes to try and remove debris from the top of the building amid fears that machinery sifting through the wreckage could injure trapped survivors. Crowds of bystanders gathered as rescuers sifted through cement and glass.

The fatality at the Melcom Shopping Center at Achimota, a suburb of Accra, was confirmed by Public Affairs Officer of the Ghana Fire Service Billy Anaglate. “We are still working to find out the fate of others who may be trapped under,” he said.

Other officials told The Associated Press that the death toll was likely to rise.

An AP reporter at the scene saw at least one man pulled from the debris, covered in dust and who was then whisked into an ambulance.

A Greater Accra Regional Public Affairs officer, deputy superintendent Freeman Tettey, confirmed that one person died and told the AP that 51 have been rescued and sent to hospitals around the capital.

“I was on my way to the shop when l saw it crumpling down,” Kojo Boadi, an eyewitness, said.

President John Mahama declared the scene a disaster zone and cut short his election campaign in the north of the country to be able to visit the site. The presidential election is scheduled for December.

The five-story store opened in February is part of the Melcom chain owned by Indian immigrant magnate, Bhagwan Khubchandani. His late father arrived in Ghana in 1929 as a 14-year-old to work as a store boy in the-then Gold Coast.

The store sells a variety of cheap, imported household goods and appliances that are popular with working-class Ghanaians.

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RIM’s BlackBerry 10 platform wins coveted U.S. security clearance

TORONTO (Reuters) – Research In Motion Ltd said on Thursday it has won a much-coveted U.S. government security clearance for its yet-to-be launched platform for BlackBerry 10 devices that are expected to hit store shelves in the first quarter of 2013.

The company said its BlackBerry 10 platform has received the FIPS 140-2 certification, which would allow government agencies to deploy the devices, along with the new enterprise management platform to run the devices, as soon as the new smartphones are launched.

RIM, a one-time pioneer in the smartphone industry, has seen its fortunes fade in recent years as nimbler rivals such as Apple Inc and Samsung Electronics Co have taken the game away from RIM with faster and snazzier devices. RIM’s fate now depends almost entirely on the long-awaited line of so-called BB 10 devices.

Last month, RIM said it had begun carrier tests on the new line of devices, which the company hopes will help it regain some of the market share it has ceded to the likes of Apple’s iPhone and a slew of other devices that run on Google Inc’s Android operating system.

The Waterloo, Ontario-based company said this is the first time BlackBerry products have been FIPS certified ahead of launch.

“Achieving FIPS certification for an entirely new platform in a very short period of time, and before launch, is quite remarkable,” RIM’s head of security certifications, David MacFarlane, said in a statement.

FIPS certification, which is given by the National Institute of Standards and Technology, is one of the minimum criteria that is required for products used by U.S. government agencies and regulated industries that collect, store, transfer, share and disseminate sensitive information.

The stamp of approval gives confidence to security-conscious organizations – including some of RIM’s top clients like U.S. and Canadian government agencies – that the data stored on smartphones running BlackBerry 10 can be properly secured and encrypted.

RIM promises that BlackBerry 10 will deliver a better user experience, along with the ability to separately manage both one’s corporate and personal data on the same device.

(Reporting by Euan Rocha; Editing by Chris Gallagher)

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Mom of “Modern Family” actress denies abuse claims

LOS ANGELES (Reuters) – The mother of “Modern Family” star Ariel Winter on Wednesday denied that she abused her daughter after a judge temporarily placed the 14-year-old actress in her sister’s care.

“It’s all untrue, it’s all untrue,” Chris Workman, Winter’s mother, told People magazine. “I have my doctor’s letter that my daughter’s never been abused.”

According to court papers, a Los Angeles Superior Court judge last month put Winter, who plays the precocious teenager Alex Dunphy on the Emmy-winning TV comedy, under the temporary guardianship of her older sister, Shanelle Gray.

Celebrity website TMZ.com said Winter’s mother was alleged to have slapped and emotionally abused the teen, and had been ordered to stay away from her. Ariel has left her mother’s home, TMZ said.

Gray will retain guardianship of Winter at least until a November 20 hearing, a judge said.

Winter’s publicist did not return calls for comment on Wednesday.

“Modern Family” portrays the lives of three zany families and has won three consecutive Emmy award as American television’s best comedy series.

(Reporting By Eric Kelsey; Editing by Jill Serjeant)

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Obama’s health care overhaul turns into a sprint

WASHINGTON (AP) — Its place assured alongside Medicare and Medicaid, President Barack Obama‘s health care law is now in a sprint to the finish line, with just 11 months to go before millions of uninsured people can start signing up for coverage.

But there are hurdles in the way.

Republican governors, opposed to what they deride as “Obamacare,” will have to decide whether they somehow can join the team. And the administration could stumble under the sheer strain of carrying out the complex legislation, or get tripped up in budget talks with Congress.

“The clarity brought about by the election is critical,” said Andrew Hyman of the nonpartisan Robert Wood Johnson Foundation. “We are still going to be struggling through the politics, and there are important policy hurdles and logistical challenges. But we are on a very positive trajectory.” Hyman oversees efforts to help states carry out the law.

In the two years since passage of the Affordable Care Act, the Obama administration has been consumed with planning and playing political defense. Now it has to quickly turn to execution.

States must notify Washington a week from Friday whether they will be setting up new health insurance markets, called exchanges, in which millions of households as well as small businesses will shop for private coverage. The Health and Human Services Department will run the exchanges in states that aren’t ready or willing.

Open enrollment for exchange plans is scheduled to start Oct. 1, 2013, and coverage will be effective Jan. 1, 2014.

In all, more than 30 million uninsured people are expected to gain coverage under the law. About half will get private insurance through the exchanges, with most receiving government help to pay premiums.

The rest, mainly low-income adults without children at home, will be covered through an expansion of Medicaid. While the federal government will pay virtually all the additional Medicaid costs, the Supreme Court gave states the leeway to opt out of the expansion. That gives states more leverage but also adds to the uncertainty over how the law will be carried out.

A steadying force within the administration is likely to be HHS Secretary Kathleen Sebelius. The former Kansas governor has said she wants to stay in her job until the law is fully enacted. “I can’t imagine walking out the door in the middle of that,” she told The Kansas City Star during the Democratic convention. Her office declined to comment Wednesday.

Republicans will be leading more than half the states, so governors are going to be her main counterparts.

Some, like Rick Perry of Texas and Rick Scott of Florida, have drawn a line against helping carry out Obama’s law. In other states, voters have endorsed a hard stance. Missouri voters passed a ballot measure Tuesday that would prohibit establishment of a health insurance exchange unless the Legislature approves. State-level challenges to the federal law will continue to be filed in court.

But other GOP governors have been on the fence, awaiting the outcome of the election. All eyes will be on pragmatists like Chris Christie of New Jersey and Bob McDonnell of Virginia, whose states have done considerable planning of their own to set up exchanges.

“Republican governors are at the center of the health care universe right now,” said Michael Ramlet, health policy director at the American Action Forum, a center-right think tank. “They do not have a uniform position across the board.”

GOP governors are pressing Sebelius on whether the administration will approve partial, less costly Medicaid expansions. There has been no ruling yet.

On health insurance exchanges, some governors whose states aren’t likely to be completely ready are considering the administration’s offer of running the new markets through a partnership.

“The real question for Republican governors is, ‘Are you going to let the feds come into your state?’” Ramlet said. “The question for the Obama administration is whether they are going to have more flexibility.”

Major regulations due shortly and covering issues including exchange operations, benefits and protections for people with pre-existing health problems could signal the administration’s willingness to compromise.

A recent check by The Associated Press found 16 states and the District of Columbia on track to setting up their own exchanges, while nine have decided they will not do so. The federal government could end up running the new markets in half or more of the states.

As far as Medicaid, 11 states and the District of Columbia have indicated they will expand their programs, while six have said they will not. That leaves more than 30 states undecided.

On Capitol Hill, Republicans say if a budget deal is going to include tax increases, it must also come with cuts to the health care law, or money-saving delays in its implementation.

While major changes can’t be ruled out, they don’t seem very likely to former Senate Majority Leader Tom Daschle, D-S.D., who is close to the administration.

“I think Democrats are increasingly emboldened about the health care act,” Daschle said. “The president won re-election partly by defending it. There is a new dynamic around the health care effort.”

Republican attempts to amend the law will continue, he added, but outright repeal is no longer a possibility. “Budgetary issues will continue to be a big question mark,” said Daschle.

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