Will Tighter Lending In China Derail US Stocks?

Investors sent the Dow tumbling on Wednesday, caught off-guard by China's decision to slam the brakes on growth.

The Street is concerned that China's actions to curb bank lending may hamper the global recovery.

But according to our news partner, Reuters, the move might not have been as impulsive as it seemed.

Reuters says some Chinese banks lent more than half of their quota for all of 2010 in the first two weeks and were lending excessively to new projects. China's top leaders, who are checking the lending data every day were not happy with the fast pace.

Also, overall inflation also has been on the rise as the Chinese economy has picked up speed, adding to the pressure on the authorities to temper economic activity, writes the New York Times.

All things considered, is the negative news priced in or will China's actions trigger more selling?

Goldman Earnings review
Goldman Earnings review   

"Is China tapping on the brake or stamping on it," muses Guy Adami. "That's the question."

"I happen to think it's the latter. Also weakness in Greece concerns me. And stocks haven't traded well despite relatively strong earnings. That also concerns me. I think we're going lower."

Joe Terranova is a little more optimistic. "I think the negative news is priced into the market, he says. If I'm wrong, however, then the deep dive in the market begins."



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Trader disclosure: On January 21st, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (UNG); Finerman Owns (AAPL); Finerman's Firm Owns (ACL), (CLX), (MSFT), (TGT), (WMT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (CVS); Finerman's Firm And Finerman Own (GOOG); Najarian Owns (CLF) Call Spread; Najarian Owns (HUM) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (MS); Najarian Owns (PFE); Najarian Owns (CIEN) Calls; Najarian Owns (STX) Call Spread; Najarian Owns (MRVL), Is Short (MRVL) Calls; Najarian Owned (INTC) Calls Today; Terranova Is Short (CMA), (ICE), (ESS), (JCI), (CAL), (AGU); Terranova Owns (BAC), (JPM), (XOM), (FTO), (FCX), (EMC), (AAPL), (DELL), (MSFT), (QCOM); Terranova Owns (XHB) March Puts; Terranova Owns (POT) February Puts

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)

For Gary Kaminsky
Kaminsy Is Short (QQQQ)

For Dennis Gartman
Funds Managed By Dennis Gartman Are Short Euro
Funds Managed By Dennis Gartman Are Short Euro, Long Gold, Long Canadian
Dollar

For Youssef Squali
Jefferies Is A Market Maker In (GOOG)



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