Thursday morning headlines

Stocks still shaky: Positive earnings at AT&T, Lockheed and Nokia seem to be helping, along with reports of a bond insurance bailout. But in the words of Roseanne Roseannadanna, it's always something - Home sales dropped 2.2 percent in December from the previous month, while the median home price fell 6 percent from a year earlier. In the first 90 minutes, the Dow has been up in the 30-60 point range.

Relief for bond insurers?: This is what some market watchers say turned things around yesterday. Insurance regulators are working with about a dozen banks on ways of providing fresh capital for two large insurance companies that have guaranteed buyers against losses on more than $1 trillion of bonds. The discussions appear to be at an early stage. Here's been the worry: If MBIA and Ambac can't pay investors if borrowers default on their debt, then those investors could be on the hook for untold billions of dollars in losses. But hold everything: this morning, NY's insurance regulator warned of "complicated issues" in a possible bailout. From the NYT:

Traditionally, bond insurance has been a low-risk business. State and municipal bonds rarely defaulted, so the insurers paid out few claims for such debt. But in recent years the bond insurers increasingly have guaranteed debt related to subprime mortgages, a business that they thought was safe but has turned out to be risky. Now, as many subprime borrowers are defaulting, insurers could be obligated to cover some of the losses on securities backed by these loans.

Stimulus deal reached: Wow, that was fast. The bipartisan package would provide tax rebates of $300 to $1,200 per household and business tax cuts. Already, some Democrats are griping because the legislation doesn't include added spending on unemployment benefits or food stamps. Plus, the White House is coming up with its own stimulus plan. (AP)

Did John Ritter have to die?: The actor's widow, actress Amy Yasbeck, will go to court next month in a wrongful-death lawsuit in which she faults the care that Ritter received from two doctors - one who interpreted the results of a body scan and the other who treated him the night he died. Defense attorneys say their clients did nothing wrong and that Ritter would have died no matter what doctors did. From the LAT:

Ritter, best known for his starring role as Jack Tripper on "Three's Company," was an actor with tremendous earning potential, the plaintiffs' lawyers say. Because of his subsequent success on the series "8 Simple Rules for Dating My Teenage Daughter," his family is asking for more than $67 million in damages -- a stratospheric sum compared with most such claims. The family already has received more than $14 million in settlements, according to court records, including $9.4 million from Providence St. Joseph Medical Center in Burbank, where he died.

Northrop has decent quarter: The L.A.-based defense contractor was helped along by strong sales in information technology and shipbuilding. Earnings from continuing operations matched Wall Street forecasts, and the company has been upgraded to ”outperform” by Credit Suisse and Friedman Billings. (Reuters)

Outcry over cruise rule: A proposed change would require any foreign-flagged cruise line traveling between U.S. ports to stop at a foreign port for at least 48 hours from the current six to eight hours. That, of course, would be a disaster for cruises from L.A. to Hawaii or Mexico, which is why local port officials are lobbying hard. Officials at the Customs and Border Protection agency have not made a final decision. From the LAT:

The impetus for the proposed change was the increasing competition on Hawaiian routes operated by Norwegian Cruise Lines America Inc., based in Miami. Nearly all United States-based cruise lines operate their ships under foreign flags. In a December letter to Customs and Border Protection, Norwegian Vice President Alan T. Yamamoto said his company's Hawaii business had suffered so much from low-cost foreign competition that it was forced to pull one of its three ships from that service. Norwegian had accused its competitors of stretching the U.S. port rule to an unfair degree, with stays in foreign ports as short as one hour to circumvent U.S. rules.

Axium update: They're auctioning off the Hollywood payroll services company bit by bit. The company's staffing unit will go to MPS Group Inc., with a winning bid of $8.1 million. Axium's payroll-processing assets are expected to be auctioned next week. The company abruptly shut down earlier this month and filed for liquidation bankruptcy. Its largest creditor sued the former owners, alleging massive fraud and theft. (LAT)