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Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

China's Reserves Spur Policy Debate [AP]

Summary: Monday's sell-off on Wall Street was attributed to weak sales at Wal-Mart and a weaker dollar prompting selling by European investors. Some also point to a speech made last Friday by the Chinese central bank's vice governor, who reportedly spoke about the risks for Asian countries with large U.S. dollar holdings. The fear in the U.S. and for those with dollar-denominated investments is a shift by China away from U.S. Treasuries. Economists acknowledge the importance of diversifying foreign reserves, but don't seem to expect any dumping of the dollar. In recent trading, the dollar has fallen to 3-month and 20-month lows against the yen and euro, respectively. The yuan however, is trading near its all-time high against the dollar, but its daily fluctuation is restricted to 0.3% by the central bank. Regarding China's mounting foreign reserves believed to now exceed $1 trillion, an economist at Citigroup emphasizes the importance of effectively managing the vast sum -- arguing for more government support of social welfare, which would appease consumers, resulting in higher consumption and help "to keep the economy growing at 8% to 10% a year."
Related links: Commentary: Will the U.S.-China Trade/Currency Deal Adjust?China's Trade Surplus Keeps Growing and GrowingChina's Fuel Imports Surge in SeptemberChina's Foreign Reserves Approaching $1 Trillion.
Potentially impacted stocks and ETFs: ETFs: PowerShares DB G10 Currency Harvest Fund (NYSEARCA:DBV), Euro Currency Trust (NYSEARCA:FXE), iShares Lehman Aggregate Bond (NYSEARCA:AGG), iShares Lehman 1-3 Year Treasury Bond (NYSEARCA:SHY), iShares Lehman 7-10 Year Treasury (NYSEARCA:IEF), iShares Lehman 20+ Year Treas Bond (NYSEARCA:TLT), iShares Lehman TIPS Bond (NYSEARCA:TIP)

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Source: China: What to Do with Foreign Reserves At $1 Trillion and Counting?