HEADLINE NEWS

Asian markets decline as concern increases about China's lending
Asian share markets fell Tuesday because of concern that China will further restrict bank lending. Hong Kong's Hang Seng Index and Chin's Shanghai Composite dropped 2.4%, and Taiwan's Taiex plunged 3.5%. Japan's Nikkei 225 slid 1.8%, shares in the Philippines slipped 0.4% and Indonesian shares shed 0.6%. South Korea's Kospi Composite and Singapore's Straits Times Index gave up 2%, while New Zealand's NZX 50 climbed 0.6%. Markets in India and Australia were closed. The Wall Street Journal (26 Jan.)

Existing-home sales in U.S. post biggest monthly decline on record
A sharp drop in the sale of previously owned homes in the U.S. during December fueled fear that the housing recovery is faltering. From November to December, seasonally adjusted sales plummeted 16.7%, the National Association of Realtors said. It marked the biggest decline since the group started collecting the data 42 years ago. Mark Zandi, chief economist at Moody's Economy.com, said the statistic highlights the point that "the housing market is on government life support." Los Angeles Times (26 Jan.)

TARP's special inspector general investigates AIG bailout
Neil Barofsky, special inspector general for the Troubled Asset Relief Program, is looking into whether the Federal Reserve Bank of New York improperly suppressed information about the U.S. government's bailout of American International Group. Barofsky said in written testimony to the House Committee on Oversight and Government Reform that he will also investigate whether the Fed withheld documents during an audit that was finished in November. Bloomberg (26 Jan.)

Rising delinquencies prompt S&P downgrade of CDOs linked to ABS
Some $4.2 billion of U.S. collateralized debt obligations of asset-backed-securities transactions were downgraded by Standard & Poor's Ratings Services. Of the 38 tranches from 13 CDOs of asset-based securities deals, 15 were placed on watch for further downgrades. The Wall Street Journal/Dow Jones Newswires (1/25)

Analysis: Hedge funds rebound after tough 2008, strong gains in 2009
Hedge funds were the pariah of the financial-services industry at this time last year, as this article notes. Investors' risk appetite had plunged after Lehman Bros. collapsed, and fund managers had their hands tied because they were prohibited from short-selling financial stocks. In 2008, the industry suffered its worst annual losses, but it rebounded in 2009 to report its strongest gains in a decade, according to Hedge Fund Research. Confidence has started to return to markets, as evidenced by a growing number of funds being launched. The Times (London) (1/26)

Exchanges push for price quotes in subpenny increments
Nasdaq OMX Group, NYSE Euronext, BATS Global Markets and Direct Edge, which has yet to gain exchange status, are supporting an effort to get regulators to allow price quotes in increments of less than a penny. The move is part of the exchanges' effort to become increasingly attractive to electronic traders. "We've had institutions, hedge funds, a broad variety of customers asking for this," said Brian Hyndman, senior vice president of transaction services at Nasdaq OMX. The Wall Street Journal (26 Jan.)