Wednesday morning headlines

Now it's inflation: The Fed is shifting course, which means that interest rates are likely to start rising in the months ahead. Of course, you don't need the Federal Reserve to declare that inflation is becoming a problem - just visit your supermarket or service station. None of this is very appealing to Wall Street, which absolutely HATES inflation. The Dow is down 170 points this morning. (NYT)

New SAG strategy?: Screen Actors Guild leaders are being accused of dragging their feet in negotiations with the media companies, supposedly part of a strategy to wage war against Hollywood's other actors union, the American Federation of Television & Radio Artists. AFTRA has worked out a new contract that SAG doesn't like (to put it mildly). "Since returning to the table two weeks ago, word is that the SAG negotiating committee in caucus spends far more time talking about AFTRA than about the issues embedded in theirs and management's respective proposals," writes AFTRA negotiating committee chairman Matt Kimbrough. SAG is urging its members who also belong to AFTRA to turn down the contract proposal. (Variety)

Bratz designer erased data: This could be a huge turning point in the ongoing federal trial involving Mattel and MGA Entertainment, which makes the Bratz dolls. Mattel says that doll designer Carter Bryant scrambled a computer hard drive days before data were to be copied for a federal lawsuit. Mattel said the information, which could have included email exchanges and early Bratz artwork, was rendered unrecoverable. Mattel claims that Bryant was still an employee when he worked on the Bratz idea. He's expected to testify later this month. (WSJ)

Mercury trims insurance rates: The low-cost insurer is announcing a 3 percent cut in its auto premiums, mostly impacting Socal customers. The reductions are based on new state criteria that downplay the importance of where a car is parked overnight. (LAT)

Ambassador foreclosure: This was to have been a huge mixed-use project on the site of the former Ambassador College complex in Pasadena. Drawbridge Special Opportunities Fund decided to foreclose on Ambassador West's 20-acre site three months after appointing a receiver. The Ambassador West project had called for 70 condos and 46 apartments while preserving 12 acres as open space. (Pasadena Star-News)

Kerkorian gets big response: The Bev Hills billionaire had no trouble finding Ford shareholders willing to sell their stock for $8.50 a share. Investors tendered 1.02 billion shares, or almost half of Ford's 2.2 billion shares outstanding. Kerkorian's Tracinda Corp. said it still plans to purchase 20 million shares. It will wind up with about 5.6 percent of Ford’s common or Class A stock. (Detroit Free-Press)

Still high on Countrywide: Bank of America CEO Ken Lewis told analyst Meredith Whitney that he was a believer in the Calabasas-based mortgage giant. Lewis emphasized that B of A “has made significant writedown assumptions across” Countrywide’s portfolio, and “that even if writedowns exceed expectations, the transaction is still attractively priced, just to a slightly lower degree.” From Fox Business News:

Whitney adds that Lewis “is cautiously optimistic on the economic environment, as recent 30-day delinquency data across the board has slowed its acceleration and credit losses are remaining concentrated in high risk states,” such as California, Florida and Nevada. Whitney adds that “Lewis continues to see a distinct divide between the troubles on Wall Street and the state of affairs on Main Street.” Specifically, “the hierarchy of payments for consumers remains cards, autos, and homes, and that customers are still generally paying their auto and credit card bills.” Whitney says Bank of America has cut “its undrawn credit card and home equity lines where possible, but is still originating home equity loans at significantly tighter credit standards and attractive pricing.”

Queen Mary dispute: The city of Long Beach opposes the terms of a settlement between the ship's former operator Joseph Prevratil and bankruptcy trustee Howard Ehrenberg. The opposition centers on payments made to Prevratil, including about $100,000 to purchase and maintain a Hawaiian condo. Prevratil has agreed to sell the condo, now worth more than $1 million. From the Press-Telegram:

City Attorney Robert Shannon said Tuesday the proceeds from the condo aren't nearly enough. "The trustee is leaving a large amount of money on the table," he said. "Money the taxpayers are owed." Prevratil said taxpayer money is exactly what was wasted on Shannon's audit. He disputed the amount he and his company, Leisure Horizons, had received through the years, and said he was shocked by the new accusations. "They forget to mention the fact that I made payments" in the form of loans to QSDI and RMS to keep both companies afloat, Prevratil said. "It's not as though these monies went into my pocket."