Gold Investments Weekly Newsletter
IMF, World Bank, New York Times, FT, Volker & Greenspan Warn of Systemic Threats.Performance( % Change)
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Gold was up 0.28% for the weekIt gained $0.80 to $426.50 on Friday and is up by $1.20 for the week.
Silver was up 2.44% or $0.17 for the week ending at $7.14 an ounce.
Platinum (July) finished the week at $860.30 an ounce, down $5.30 for a drop of 0.3%.
Palladium (June) closed at $198.95 an ounce down 0.9% for the week.
The precious metals seem to be continuing the process of consolidation and the short term correction in what is likely to be a long term bull market may soon come to an end.
Gold's 50 day moving average is at $429.88 and a convincing close above that number may lead to a rechallenge of it's recent 17 year highs at $455.
Gold's has support at it's 200 day moving average at $421.75 and strong support at $410.
Oil fell five straight days ending at $53.32 on Friday.
OPEC stated that astronomical prices could last for decades to come due to increasing world demand and lack of refining capacity. Oil made its record closing high of $57.27 just last Friday and made a new intraday high at $58.25 on Monday before declining for the rest of the week. Promises from Saudi Arabia, Greenspan comments, refining increases, and profit taking has resulted in oil losing $3.95 or 6.9% on the week.
OPEC's warning was echoed by the IMF. Raghuram Rajan, the Chief Economist of the IMF: "The world faces a permanent oil shock and will have to adjust to sustained high prices in the next two decades... In short, it will continue to be a rocky ride going forward, with a wide band of uncertainty surrounding high expected prices... The oil market will remain tight in the coming years, and high and volatile oil prices will continue to present a serious risk to the global economy... To the extent that there is some kind of supply disruption, $100 a barrel does not seem outlandish... It depends on how the market evolves." As living standards improve in China, India and other developing nations, oil demand will increase, especially for cars and trucks," Rajan told reporters. The IMF forecast indicates that China will be consuming nearly as much oil in 2030 as the U.S. consumes now. Currently the U.S. consumes about a quarter of the world's oil production.
Higher oil prices normally take some 12 months to feed through into the wider economy. USA Today reported how 'Fuel costs hit farmers': The US Department of Agriculture estimates farmers this year will pay $8.2 billion for petroleum, up 21% from two years ago. Troy Bredenkamp, director of congressional relations at the American Farm Bureau Federation believes the rising costs "are going to really wreak havoc within agriculture". The USDA forecasts crop-production income will drop more than 15% in 05 after rising 10% last year. Livestock income is also expected to fall this year after jumping in 04. Rising food prices has obvious inflationary implications.
Reuters Commodities Research Bureau's Index fell by 2.4% to 311.88 from 306.88 last Friday.The CRB's year to date gains are 7.2%. Since hitting a low of 182.83 in October 2001 it is up nearly 70%.
The Reuters CRB Index (the 17 basic components include hard tangible assets such as Metals, Textiles and Fibers, Livestock and Products, Fats and Oils, Raw Industrials, Foodstuffs). One of the CRB index's greatest strengths is the fact that there is an equal weighting of all of its 17 components. This weighting assures that no price increase in any single commodity, like oil, can significantly skew the entire index. Significant moves in the CRB are only possible when the majority of its component commodities are moving in unison with a particular primary trend. Oil, silver and gold only account for 3/17th of the entire index.
The Goldman Sachs Commodities Index dropped 5.8%. The GSCI is a world production-weighted commodity index which next year will be composed of 24 liquid exchange traded futures contracts. The GSCI includes energy, industrial metals, precious metals, agricultural and livestock productsIt is up 18.9% year to date.
The US dollar index, for the week was unchanged, up a marginal 0.03 to 84.45.
Most currencies were up marginally on the dollar for the week.
The euro was up 0.18 points to 129.19, and the yen was lower by 0.58 points ending at the close on Friday at 92.27.
More significant moves against the dollar included the Brazilian (+3%), the Chilean peso (+1.9%), South African rand (+1.5%) and the New Zealand dollar (+1%).
Weaker against the dollar were the Iceland krona (-1.9%), the Canadian dollar (-1.2%), the Thai baht (-0.9%) and the Taiwan dollar (-0.7%).
The recent bond market rally seemed to lose momentum.
Two-year Treasury yields ended the week up 2 basis points to 3.74%. Five-year Treasury yields also added 2 basis points, ending the week at 4.14%. Long-bond (30 year) yields rose 4 basis points to 4.76%.
The 10-Year Treasury note yield was up 0.9% for the week to 4.491% from 4.450%.
For the week, the blue chip Dow Jones Industrial Average was up
0.55% to 10,461.40
The more important and representative S&P 500 Index was up 0.71%, to 1,181.20
The Nasdaq composite was up 0.73% for the week and closed at 1999.35.
Major market indices were up marginally for the week despite a sell off on Friday. On Friday the S&P dropped 0.85% and the Nasdaq by 0.96% breaking 4 days of slight gains. It was the fourth Friday in a row that the indexes closed lower.
The Transports dropped 2%.
The Utilities were up 0.5% gain.
The Morgan Stanley Consumer index was up 2%.
The Morgan Stanley Cyclical index was slightly positive.
The small cap Russell 2000 and S&P400 Mid-cap indices remained largely unchanged for the week.
The NASDAQ100 added 1% and the Morgan Stanley High Tech index was up marginally
The Semiconductors gained 1.4%.
The Street.com Internet Index and NASDAQ Telecommunications indices were up fractionally.
Biotechs have been very volatile of late and for the week surged 4.6%.
The Broker/Dealers were slightly in the black for the week, and the Banks gained 1%.
The HUI Gold index of unhedged gold and silver mining stocks was down 2% despite gold bullion having a small increase for the week.
Despite the small gains eked out the stock markets predominant concerns remained rising interest rates and the oil price and their impacts on earnings growth and the crucial US consumer whose spending accounts for 60 to 65% of the US economy. There is increasing nervousness as the Federal Reserve has embarked on tightening interest rate cycle to combat inflation. The fears of burgeoning inflation have some worried that the Federal Reserve may be forced to increase interest rates by 50 basis points or 0.5% at their next meeting. Historically, periods of rising interest rates have been difficult for most sectors in the stock market.
The Dow Jones Transportation Index was down some 2.5% for the week possibly due to rising oil prices. Oil sensitive sectors such as truckers, rails, airlines and freight companies such as Fedex all struggled.
The energy and steel sectors were down for the week but are still outperforming most other sectors in the last few years.
Comstock Funds have pointed out that "the current reading of 1180 was first reached in 1998, meaning that the market, despite all of its volatility, has essentially gone nowhere for seven years. That just doesn't happen in secular bull markets". Not only has the important S&P gone nowhere for 7 years but adjusted for the considerable inflation of the last few years the price is actually down. This would seem to indicate that we are not in a new bull market but rather a significant bear market rally within a long term bear market.
The collapse of Elan's share price has knocked some EUR400m off the value of Irish pension funds in the first quarter of this year according to figures from consultants Mercer. This is a blow to the Irish pensions industry and suggests that some pension funds may have been overweight Elan's stock and may not be as diversified as would be prudent.
The lacklustre share performance of General Electric (GE), Fannie Mae (FNM), General Motors (GM) , Citigroup (C), American International Group (AIG) and Walmart (WMT) continues. These important global corporations have now broken down technically after forming massive tops.
Earnings season gets in full swing next week, when stock investors will comb through scores of corporate report cards to check the U.S. economy's pulse.
IMF, World Bank, editors of the NY Times & FT, Volcker & Greenspan Warn of Systemic Threats.
The week witnessed the World Bank, the IMF and Alan Greenspan all warning of systemic risks that face the global economy. Systemic risks are risks that relate to or affect the entire body, the entire organism or the entire global financial system. None of these financial institutions, newspapers and officials are known for alarmist rhetoric.
The World Bank warned in its 2005 Global Development Finance Report that 'global growth momentum has peaked', the global economy is a at a turning point and is 'headed for a slowdown'. They warned of the risks posed by the record US trade, budget and current account deficits, higher oil prices, a depreciating dollar and rising interest rates. The report focussed primarily on the risks posed by these macroeconomic trends to developing countries but obviously in a global economy these fundamental economic trends will affect all countries.
The World Bank also warned of the "gravest risk" for markets as a deep and disorderly US dollar decline might create financial market volatility and push up interest rates in the US and globally thereby choking off any economic recovery. A US dollar collapse, below what the bank's economists see as its long-term equilibrium level, could also result in "a costly restructuring of world industry that would have to be undone in following years as the US dollar returned to its equilibrium level".
Foreign reserves held in developing countries, up $US292billion in 2003, rose a further $US378 billion ($491 billion) last year, the bank said. Asia, and particularly China, accounted for much of this accumulation, but 101 of 132 developing countries increased their reserves last year.
"A sharp depreciation of the US dollar could result in large capital losses in local currency terms for developing countries with substantial US dollar reserves," the bank said. The global economic cycle peaked in the second half of last year, the bank said. Higher US interest rates and oil prices would subdue growth this year and there could be a decline in investor risk appetite.
The warning was echoed by the International Monetary Fund in their semi annual World Economic Outlook report. The International Monetary Fund (IMF) and some private economists have expressed concerns about the size of the US current account deficit and likely consequences of this deficit's adjustment. In its early 2004 World Economic Outlook, the IMF said that "even an orderly current account adjustment ... would likely be associated with a slowdown in gross domestic product (GDP) growth".
Rising oil prices were also addressed "The oil market will remain tight in the coming years, and high and volatile oil prices will continue to present a serious risk to the global economy". The World Economic Outlook report was reinforced by statements by Raghuram Rajan the Chief Economist of the IMF and by Rodrigo Rato, the Managing Director of the IMF (see Opinions of the Week below).
The Editorial of the New York Times 'Before the Fall' warns against complacency and the possibility of an uncontrollable fiscal crisis: "If the economy is in a housing bubble, as many analysts believe, higher mortgage rates would pop it, with dire results for homeowners' balance sheets and the overall health of the economy. ... The recent rally of the United States dollar not withstanding, the greenback has nowhere to go but down. The dollar's current uptick is just a breather in its overall downward trajectory. ... The dollar is heading down, no matter what. ... If the world's central bankers accumulate fewer dollars, the result would be an unrelenting American need to borrow in the face of an ever weaker dollar - a recipe for higher interest rates and higher prices. The economic repercussions could unfold gradually, resulting in a long, slow decline in living standards. Or there could be a quick unravelling, with the hallmarks of an uncontrolled fiscal crisis".
The Financial Times warns of a depreciating dollar but also of the fragility of all fiat currencies: "The euro does not have much to recommend it, other than not being the dollar. ... In truth, there are good reasons for selling all three of the world's main currenciesBut could they all fall? Yes, against either gold or the Chinese renminbi. In recent years, gold has been a useful hedge against the dollar, but not against the euro or yen. Meanwhile, the U.S, Japan, and the EU would all like to see the renminbi revalue, but so far, the Chinese are not playing". See Gold: The only currency that can't be printed - Fleckenstein, MSN Money, 11-04-05.
Alan Greenspan focussed on the narrower issue of the risks posed by the massive derivatives and debt exposure of the GSE's and thier implications for the wider economy. Fannie Mae (FNM) and Freddie Mac (FRE) are the huge US mortgage providers. "If we fail to strengthen GSE (Government Sponsored Enterprise) regulation, we increase the possibility of insolvency and crisis. We put at risk our ability to preserve safe and sound financial markets in the US - a key ingredient of support for home ownership. This is the heart of a dilemma in designing regulation for GSEs. World-class regulation by itself may not be sufficient and, indeed, might even worsen the potential for systemic risk if market participants inferred from such regulation that the government would be more likely to back GSE debt in the event of financial stress".
Ex Chairman of the Federal Reserve, Paul Volker echoed the concerns of the IMF, World Bank, FT and NY Times. In an article in Sunday's Washington Post entitled 'An Economy On Thin Ice' he wrote: "There are disturbing trends: huge imbalances, disequilibria, risks -- call them what you will. Altogether the circumstances seem to me as dangerous and intractable as any I can remember, and I can remember quite a lot. What really concerns me is that there seems to be so little willingness or capacity to do much about it. ... The difficulty is that this seemingly comfortable pattern can't go on indefinitely. I don't know of any country that has managed to consume and invest 6 percent more than it produces for long. The United States is absorbing about 80 percent of the net flow of international capital. And at some point, both central banks and private institutions will have their fill of dollars. I don't know whether change will come with a bang or a whimper, whether sooner or later. But as things stand, it is more likely than not that it will be financial crises rather than policy foresight that will force the change".
Systemic risk is risk that affects an entire financial market or system, and not just specific participants, sectors or countriesIt is possible to decrease systemic risk through diversification. All investments involve an element of risk. Risk is the quantifiable likelihood of loss or less-than-expected returns. Examples of such risk include currency risk, inflation risk, principal risk, country risk, economic risk, mortgage risk, liquidity risk, market risk, opportunity risk, income risk, interest rate risk, prepayment risk, credit risk, unsystematic risk, call risk, business risk, counterparty risk, purchasing-power risk, event risk.
An investor who does not evaluate the risk involved in every investment and does not factor risk into their investment strategy besides being naive and foolhardy is actually not an investor at all but rather a financial gambler or speculator. Speculators take large risks, especially with respect to trying to predict the future; gambling, in the hopes of making quick, large gains rather than a slow and steady accumulation of wealth.
Prudent and real diversification means having a portfolio or investment strategy designed to reduce exposure to risk by combining a variety of investments, such as stocks, bonds, property and precious metalsPrecious metals have an inverse correlation to other asset classes meaning they generally move in the opposite direction. The goal of diversification is to reduce the risk in a portfolio. Volatility is limited by the fact that not all asset classes move up and down in value at the same time or at the same rate. Diversification means not having all one's eggs in the one basket and reduces both the upside and downside potential and allows for more consistent performance under a wide range of economic conditions.
A defensive investment strategy involves a portfolio allocation strategy designed to minimize the risk of losing principal, by paying down debt and having a larger allocation to cash and precious metals. This more conservative, cautious and risk-averse investment strategy which has preservation of capital as a high priority is merited in a rising oil price and rising interest rate environment. Preservation of capital is a more conservative investment strategy characterized by a desire to avoid or minimise risks of loss of capital.
All individuals, companies, institutions and governments should be adopting more conservative and defensive investment strategies at this time.
Opinions of the Week.
"The outlook for economic growth in the United States and the Euro zone has
worsened. Slow expansion lies ahead in the OECD area according to the latest
composite leading indicators (CLIs). February data showed weakening performance
in the CLI's six month rate of change in all of the Group of Seven major economies
Organization for Economic Cooperation and Development (OECD).
"If we fail to strengthen GSE (Government Sponsored Enterprise) regulation,
we increase the possibility of insolvency and crisis. We put at risk our ability
to preserve safe and sound financial markets in the US - a key ingredient of
support for home ownership. ... This is the heart of a dilemma in designing
regulation for GSEs. World-class regulation by itself may not be sufficient
and, indeed, might even worsen the potential for systemic risk if market participants
inferred from such regulation that the government would be more likely to back
GSE debt in the event of financial stress".
Alan Greenspan, Chairman of the Federal Reserve, Testimony before the US Senate.
"As the drumbeat of protectionism grows louder, financial markets could certainly
suffer. The dollar undoubtedly would be first to go. Given the extreme nature
of America's massive trade deficit, the currency correction could well be swift
and severe. That, in turn, would probably trigger a sharp back-up in long-term
US interest rates -- having a cascading impact on over-valued property markets,
asset-dependent consumers, earnings expectations, and US equities. Emerging
market debt spreads -- already far too tight for my liking -- look especially
vulnerable in a scenario of mounting trade frictions; the fundamental underpinnings
of these export-led economies would get turned inside out if global trade flows
slacken significantly. Chinese intransigence could well be the biggest risk.
With the China-bashing train having left the station in Washington, that could
well turn the low-probability threat of the tariff option into reality. China
might then retaliate by reducing its purchases of US Treasuries -- sparking
a full-blown dollar crisis that would have the potential to take an even more
serious toll on world financial markets and the global economy. In my view,
these dangers are a very real possibility if the political forces of protectionism
take on a life of their own. It is clearly in the best interest of all parties
to avoid such an outcome. The question is, Can they?"
Stephen Roach, 'Global: The Drumbeat of Protectionism', Morgan Stanley.
"Still, having the biggest superpower and only hyperpower in the world being
the largest net debtor in the world and the largest net borrower in the world
(at growing rates) is both unprecedented and dangerous. Given likely trends
in U.S. twin deficits that are likely to worsen, non-residents will have to
increase the share of their portfolios invested in U.S. assets while facing
increasingly certain large capital losses. Thus, the willingness of both official
(central banks) and private investors to accumulate U.S. assets, and especially
U.S. Treasurys, will shrink over time leading to higher risks of a hard landing.
Without serious fiscal adjustment in the U.S, a further sharp fall of the dollar
wouldn't be benign. It would improve the U.S. current account only through
a fall in consumption and investment driven by much higher real interest rates,
once foreign central banks reduce their willingness to finance the U.S. twin
deficits. As former U.S. Treasury Secretary Summers put it, we are facing a "balance
of financial terror" where reduced willingness of China and other countries'
central banks to finance the reckless U.S. fiscal policies will lead to a severe
real and financial hard landing"
Roubini, 'Does Overseas Appetite for Bonds Put the US Economy at Risk?', Wall Street Journal.
"If the US refuses to take meaningful steps to reduce its fiscal deficit and
its need to draw on global savings to offset its own low private savings rate,
Asian central banks are likely to tire of bearing most of the burden of financing
the US twin deficits on their own. After all, the longer they finance a US
that refuses to adjust, the larger their real and financial costs down the
line. Japan cannot hold the fort alone, and neither Europe, the major oil exporters
or other countries at the periphery of the Bretton Woods 2 system will prove
willing to take up the burden that emerging Asia no longer wants for long.
China may be willing to add $240 billion, or even $300 billion, to its reserves
for another year. We doubt it will be willing to do so for two more years.
Market financing alone is not enough to cover a $800 billion plus US current
account deficit: without tacit agreement among the world's central banks on
how distribute the growing burden of meeting the United States increasing need
for external financing, the United States' current consumption driven growth
model will run into limits. Consequently, the risk a disorderly unraveling
of the Bretton Woods 2 system -- a sharp correction of the US dollar and of
the US bond market, a surge in US long-term interest rates, a sharp fall in
the price of a wide variety of risky assets (such a equities, housing, high-yield
bonds, and emerging market sovereign debt) - are growing. Such an unraveling
could result in a sharp economic slowdown in the US. It will force countries
that now depend on US demand growth for their growth to adjust as well. But
if the financing for the US is not available, global adjustment is unavoidable".
Roubini, Stern Business School, New York University & Setser, Oxford University
'Will the Bretton Woods 2 Regime Unravel Soon?'.
"Since the PIMCO forecast is for real yields to stay low, absent a policy
mistake by the Fed, we may well whimper along rather slowly as all asset classes
compress to provide 2-3 percent real and 5+ percent nominal returns over long
periods of time. We remain mindful, however, of not only potential central
bank errors of judgment, but of oil, currency and geopolitical sparks that
could produce a calamitous Big Bang in a highly levered, finance-based economy".
Bill Gross, Investment Outlook, April 2005, PIMCO Bonds.
"All this is fun while it lasts for Americans, who get to buy whatever they
want and then have the foreigners lend the money back. Much of the buying comes
from Asian central banks, which buy dollars to keep their currencies from rising
against the dollar and perhaps making their exports less competitive. In the
long run, argues Warren Buffett, the chairman of Berkshire Hathaway, the omens
are bad for Americans, who will see a lot of their productive capacity diverted
to service all that overseas debt. That is, of course, just what the third
world used to complain about. What is not clear is what will cause a change
in the near future. So long as China and Japan, and to a lesser extent other
Asian countries, want to keep buying dollars and investing the money in bonds,
nothing will stop them. But those central banks can be seen as a cartel trying
to keep the dollar high, and in that light they might face the same risk that
all cartels eventually face: cheating members. In this case, it is clearly
to the advantage of the cartel to keep the dollar high. But each individual
member might like to sell some of his dollar holdings without affecting the
overall market. A recent spate of talk of diversification by central banks
- meaning that they would buy more gold or euros or yen or pounds, rather than
just dollars - could be a signal that members of the dollar cartel are at least
starting to think about cheating. And, Jensen argues, "once a few of them start
to cheat, it puts more pressure on the others".
Floyd Norris, 'A Dollar Cartel buys American Bonds', International Herald Tribune.
"For the moment I would not speak of a speculative bubble but of the danger
of a systemic crisis linked to the accumulation of foreign exchange reserves.
Some countries, particularly Asian ones, have no interest in the parities of
major currencies being modified. As a result, they are financing the enormous
American current account deficit. Today, the danger is that some dealers are
starting to think they must change the rules of the game, play dollar depreciation
and move towards the yen and the euro. That would confront us with a real systemic
risk. Cutting the U.S. deficit is key. Too drastic a programme would plunge
the United States into recession. ... Recent pronouncements by Alan Greenspan,
chairman of the U.S. Federal Reserve, suggested things were changing but we
are at the mercy of the nervousness of market dealers. Today, no catastrophe
is anticipated in the coming six to nine months. So I am not yet totally pessimistic".
Francois Bourguignon, Chief Economist, World Bank.
"The world faces a permanent oil shock and will have to adjust to sustained
high prices in the next two decades. ... In short, it will continue to be a
rocky ride going forward, with a wide band of uncertainty surrounding high
expected prices. ... The oil market will remain tight in the coming years,
and high and volatile oil prices will continue to present a serious risk to
the global economy. ... To the extent that there is some kind of supply disruption,
$100 a barrel does not seem outlandish. ... It depends on how the market evolves".
Raghuram Rajan, Chief Economist, IMF, World Economic Outlook.
"But further sharp increases may have more serious effects: looking forward,
supply and demand will remain in balance at best, with limited prospects for
building spare capacity, and the oil market will remain vulnerable to shocks.
Oil-producing and consuming countries need to work together to ensure oil market
stability, including through strengthening energy conservation, reducing obstacles
to investment, and improving data transparency".
Rodrigo Rato, Managing Director, IMF.
"A sharp increase in US interest rates, for instance prompted by a rise in
inflationary expectations or weaker demand for US securities, would adversely
affect the (global) expansion and lead to a significant deterioration ... the
huge US current account deficit is a mounting concern. Thus far foreign investors
led by Asian governments had kept the deficit well financed. ... However, the
demand for US assets is not unlimited. A sharp reduction, or a reversal, of
capital inflows could entail serious consequences for currency and capital
Rodrigo Rato, Managing Director, IMF.
"High oil prices are an increasing downwards risk. The same applies to the
growing global current account deficits, the gap with growth and savings rates.
... If however, oil prices, inflation or currency movements cause abrupt changes,
the situation could deteriorate dramatically".
Rodrigo Rato, Managing Director, IMF.
"Let me put it in plain terms for you: America is increasingly dependent on
foreign central banks to sustain the value of the dollar. High consumption
is made possible courtesy of the world's savers. We are getting a free ride
into indebted servitude to foreign bondholders. The ride into indebtedness
may be free, but getting out is going to be very expensive. That trifecta of
debt ought to be enough to scare the daylights out of U.S. Treasury bondholders.
But in the context of high oil prices, the debt numbers take second place in
investors' minds - at least for now U.S. bonds are getting a bid. Fundamentally,
the stage is set for a huge dollar sell-off. With the deficits soaring, demand
for the dollar is bound to wane. When it does, the dollar will go down, interest
rates will go up, and a whole series of secondary reactions will unfold in
Dan Denning, Editor, Strategic Investment.
"If the world's central bankers accumulate fewer dollars, the result would
be an unrelenting American need to borrow in the face of an ever weaker dollar
- a recipe for higher interest rates and higher prices. The economic repercussions
could unfold gradually, resulting in a long, slow decline in living standards.
Or there could be a quick unravelling, with the hallmarks of an uncontrolled
Editorial, New York Times, 2-04-05.
Opinions and Quotes can be found in articles in the News and Commentary sections of www.gold.ie.
Key Events in the Week Ahead
Earnings season gets in full swing next week, when stock investors will comb through scores of corporate report cards to check the U.Seconomy's pulse.
At the same time, investors hope oil prices will slip further from the record $58.28 a barrel hit early last week.
The red ink will be flowing on Tuesday when the nation's trade balance for the month of February and Treasury budget for March are released. Analysts expect the trade balance to be negative $58.3 billion, on par with the prior month. The experts predict the budget will arrive $73 billion in the red, just a small pork project higher than last month's $72.9 billion.
The budget will be released at 2 p.m. EDT, along with the FOMC minutes from the March 22 meeting.
Retail sales data will be released on Wednesday, followed by business inventories and initial claims on Thursday.
The week finishes on Friday with a flurry of economic data, including import and export prices, capacity utilization, industrial production and Michigan sentiment.