By James Langton

(January 15 – 07:15 ET) – This week will be a short one for U.S. markets with today being Martin Luter King, Jr. Day — a national holiday — but a flurry of earnings and economic news is due to arrive.

Tuesday will be a quiet day, too, but on Wednesday the U.S. Consumer Price Index is due out. Economists are calling for a 0.2% rise on both the headline and the core rate — excluding food and energy prices.

After the positive surprise from the Producer Price Index last Friday, the CPI will be closely watched. Will the U.S. Federal Reserve have enough room for rate cuts at the end of the month? “On balance, another 0.2% headline and 0.2% core reading are most probable. This would not provide the visible softening of inflation that would give the Fed real room to cut rates seriously,” say BMO Nesbitt Burns economists.

Industrial production numbers, capacity utilization and the Fed’s Beige Book are all due out on Wednesday, too. The Beige Book may be boring, but BMO Nesbitt says, “Factory utilization is plunging, which is bad news for profits and good news for inflation. Capital spending plans will likely suffer due to the declining utilization rate.”

Finally, on Wednesday, OPEC is meeting. The oil-producing country cartel is expected to announce a substantive production cut which will cause some waves in the market.

On Thursday, Canadian CPI numbers will be released. The consensus among analysts is for the number to remain unchanged at a 3.1% annual headline rate, 1.9% at the core. BMO Nesbitt says, “While the growth outlook is center-stage at the Bank of Canada, policymakers will certainly not turn a blind eye to inflation developments. Recent trends indicate that risks remain on this front. The gradual rise in underlying prices, on top of a still-solid domestic expansion, suggests a restrained policy response to Fed easing is warranted.”

Thursday’s only number will be In the U.S. housing starts.

Friday will bring merchandise trade numbers on both sides of the 49th Parallel. The Canadian data won’t matter much, according to CIBC World Markets’ Avery Shenfeld. He suggests, “Both bonds and equities are likely to take their cue from U.S. developments, awaiting the Bank of Canada’s rate announcement and key retail data due the following week.”

Despite all this economic news, earnings reports are likely to dictate market action. According to First Call, eleven Dow Jones companies are expected to report next week. On Tuesday the onslaught begins with Intel, Applied Micro Circuits, Juniper Networks, Teradyne, Novellus Systems, Handspring, Citigroup, Wells Fargo, Bank America, Mellon Financial, Bank of New York, Parker-Hannafin, Rockwell International, and Abbott Labs reporting.

On Wednesday, reports from IBM, Apple Computer, Advanced Micro Devices, Xilinx, KLA-Tencor, General Motors, Eastman Kodak, Delphi Automotive, JP Morgan Chase, Bank One, State Street, Burlington Resources, Boeing, Tyco International, AMR, and Biogen are expected.

Thursday will bring reports from Commerce One, Inktomi, Checkpoint Software, Microsoft, Sun Microsystems, Nortel Networks, Altera, Ford Motor, Sears Roebuck, Johnson Controls, Schlumberger, Global Marine, Suncor Energy, Boise Cascade, Freeport McMoRan Copper, Caterpillar, United Technologies, Delta Air Lines, Duke Energy and Genentech.

Friday is characteristically quieter, but we will still hear from Conexant, Qwest Communications, Visteon, Archer Daniels Midland and Edison International.