Wednesday morning headlines

Stocks take dip: An unexpected decline in home construction and building permits puts a damper on consumer companies. Dow is down about 50 points in early trading.

New budget woes: Lots more red ink from Sacramento - another $6.3 billion projected in the current fiscal year and a $14.4 billion deficit expected for the year beginning next summer. Look for more budget cutting and borrowing. From the LAT:

The task in 2010 could be even harder than it was this year, when record deficits and cash shortfalls drove California to issue IOUs for only the second time since the Great Depression. Lawmakers have already cut billions from education, healthcare and social services while temporarily hiking income, sales and vehicle taxes. "I can't think of any good solutions," said Assemblywoman Noreen Evans (D-Santa Rosa), who chairs the lower house budget committee.

Disney shuts down "Nemo": The planned $150 million project was just a few months from shooting. Newly named studio chief Rich Ross pulled the plug. From the LAT:

According to people familiar with the situation, who were not authorized to speak publicly about it, Disney executives made the choice not to proceed based on concerns that parts of the movie were too dark, among other creative issues. One person with knowledge of the project said the studio intends later to restart development on the Jules Verne classic. Disney first brought "Leagues," about adventurers aboard a submarine as it encounters a giant squid, to the big screen in 1954 with actors Kirk Douglas and James Mason (as Captain Nemo). Disney had previously made overtures to Will Smith to play Nemo but no deal was struck and no actors had been cast.

Pumpkin shortage?: Supplies are tight because of heavy rains in the Midwest. Nestle, which pretty much controls the canned market, has issued an apology for the limited supplies, though there appears to be enough to last through Thanksgiving. (LAT)

Toys and lead: CA Attorney General Jerry Brown says that seven products tested by the Center for Environmental Health contained leads levels far above the legal limit. The list includes Disney Fairies Silvermist's Water Lily Necklace (73 times over the limit) and the Barbie Bike Flair Accessory Kit (20 times over). From the LAT:

Brown said in a news release that he sent a letter last week to six major retailers warning them that products on their shelves contain illegal levels of lead. He asked them to pull the products from their stores immediately. "Lead is a toxic metal that damages the nervous system and other organs," Brown wrote in the letter. "Even at low levels of exposure, lead can impact brain development in children."

New Silicon Valley fund: Norwest Venture Partners has raised $1.2 billion, in part to finance large investments in mature companies (typically not what VCs do). From the NYT:

Two of those came from Norwest's portfolio: the $405 million sale of the videoconferencing start-up LifeSize Communications to Logitech this month and the public offering of Rackspace Hosting, a Web hosting company, last year. "I know there's a lot of doom and gloom out there, but I believe it's a little bit more exaggerated than it really is," said Promod Haque, a managing partner at Norwest, which has long been a presence in Silicon Valley. "There are still good companies that are getting created."

Vivendi-GE talks: The two companies are still working out terms that would have the French company sell its stake in NBC Universal and set the stage for Comcast becoming majority owner of the media giant. They're haggling over money, of course, though it's unclear how serious the price gap is. (WSJ)

Insurer raises rates: The State Compensation Insurance Fund, CA's largest workers compensation insurer, will hike premiums an average 5 percent. Way higher medical costs are behind the rate increase. (OC Register)