'Sustained' used again/Live Entertainment continues to rock and roll/Other important stuff

I keep hearing the word 'sustained' or something similar when it comes to what Fed members are looking for with regards to the pace of inflation. From Boston president Susan Collins, "Seeing sustained, broadening signs of progress should provide the necessary confidence I would need to begin a methodical adjustment to our policy stance."

Mester last night said "It would be a mistake to move rates down too soon or too quickly without evidence that inflation was on a sustainable and timely path back to 2%."

Kashkari echoed what Powell said that they aren't looking for better inflation data from here, but "additional inflation data that is also at around this 2% level." 'Additional' could equate to 'sustainable' here. 

And from Adriana Kugler, "At some point, the continued cooling of inflation and labor markets may make it appropriate to reduce the target range for the federal funds rate." 'Continued' could equate to 'sustainable' here. She did add a caveat that "if progress on disinflation stalls, it may be appropriate to hold the target range steady at its current level for longer."

Wage growth has certainly moderated from its heated growth rate of last year but it's still very good and still running well above the pre Covid trend. The January 3 month average Atlanta Fed's Wage Growth Tracker rose 5% y/o/y vs 5.2% in December. The 20 yr pre Covid pace was 3.4% on average. For 'job changers,' wages rose 5.6%, little changed with 5.7% in December. For 'job stayers,' their wages went up 4.7% y/o/y vs 4.9% in the month before. 

Bottom line, higher wages at these levels are good for consumers who are seeing moderating inflation but depending on the productivity of one's business, I've heard countless times from earnings calls about the sticky labor cost situation even as other costs like raw materials have moderated and that of course could impact profit margins or pricing pass through of those costs or other costs will be contained or cut. 

Here's a container shipping update. The Shanghai to Rotterdam price for a 40 foot container fell for a 2nd week by $235 to $4,426. That's off the recent peak of $4,984 at the end of January but still up from $1,667 at the end of December. Also of importance today, Maersk stock is down sharply, by 15%, as while freight rates have jumped, the CEO still highlighted the excess ship supply that is coming online this year and they suspended their stock buyback once the macro here has settled out. 

He said, "The Red Sea disruption is absorbing some of the overcapacity temporarily. However, the structural imbalance will catch up during 2024 and exacerbate over time, irrespective of whether the situation in the Red Sea endures or resolves itself."

The yen is getting whacked and JGB yields are down a touch after BoJ Deputy Governor Shinichi Uchida said overnight that "Even if the bank were to terminate the negative interest rate policy, it is hard to imagine a path in which it would then keep raising the interest rate rapidly...the Bank would, I think, maintain accommodative financial conditions even if the termination were to take place."