Greenspan to speak on accounting

FEDERAL Reserve chairman Alan Greenspan visits Capitol Hill this week amid signs the US recovery is strengthening, but worries over the quality of corporate earnings will also need to be addressed.

Greenspan speaks to the House Financial Services Committee on Wednesday about monetary policy, and economists expect him to put great weight on the latest data that signal the US economy is rebounding.

But he will also surely be asked whether there is the potential for widespread accounting problems that could undermine earnings, depress share prices and maybe delay or derail the recovery. If he sees signs of risk premiums rising because of the fallout from the scandal at failed energy group Enron, financial markets would react negatively, analysts say.

In earnings news, giant retailer Wal-Mart is expected to show improvement of three cents a share to 48 cents for the latest quarter when it reports on Tuesday.

On Wednesday, the Consumer Price Index should show a modest 0.2% gain in the headline and core rates for January, the latter excluding energy and food prices. The headline rate dropped a similar amount in December as inflation has been virtually non-existent in a weak economy.

But the weakness has not helped the trade deficit, which continues to be an enormous drag. On Thursday, economists expect the Commerce Department to report a trade shortfall of $28.5bn (£20bn) for December, up from $27.9bn the month before.

Initial claims figures due on Thursday, a weekly release that gives the most uptodate look at job losses, are expected to be about 380,000. Economists are encouraged that the labour market is experiencing a lower rate of job cuts than late last year.

Data supplied by Thomson Global Markets