China’s policy moves and the fate of the United State’s credit rating are once again weighing on investors’ minds, sending stocks and exchange traded funds (ETFs) mixed in early trading.

China Premier Wen Jiabao took aim at Washington yesterday, criticizing efforts to increase exports through weakening the dollar as “trade protectionism.” He also said that the pressure being placed on China to allow the yuan to appreciate is counterproductive, and that he doesn’t consider the yuan is overvalued. WisdomTree Dreyfus Chinese Yuan (NYSEArca: CYB) is down slightly this morning. [Play the Yuan’s Fortunes With These ETFs.]

The United States has been put on notice: its days of top-notch credit ratings are at serious risk of ending. Right now, the U.S. credit rating is Aaa and “stable,” but Moody’s said that its “distance-to-downgrade” has “substantially diminished.” The United States is not alone here; Britain, France, Spain, Germany and others are at risk of downgrades, too. SPDRs (NYSEArca: SPY) are down about 0.7% this morning.

A battle royale over financial reform is shaping up in Congress. Senate Banking Committee Chairman Christopher Dodd is expected to unveil legislation that will be even tougher on the financial industry than President Barack Obama’s original plan. Dodd’s bill will allow the Federal Reserve to examine any bank holding company with assets in excess of $50 billion. Large financial companies that aren’t banks could also fall under scrutiny under the plan. Financial Select Sector SPDR (NYSEArca: XLF) is down slightly today. [6 ETFs to Play the Financial Recovery.]

Industrial production rose last month by a scant 0.1%. Despite the small improvement, it’s worth rejoicing over because it beat expectations and it’s the eight straight monthly gain. Manufacturing was the index’s laggard, declining by 0.2%. Mining and utilities, on the other hand, gained 2% and 0.5%, respectively. Vanguard Industrials (NYSEArca: VIS) is down about 0.3% this morning.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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