Dairy prices rise, despite WMP drop; US job openings at record high; RBA holds despite current weaknesses; Murray Goulburn starts 2017/8 low; Harvard selling out of NZ; UST 10yr yield 2.14%; oil and gold higher; NZ$1 = 71.9 US¢, TWI-5 = 76

In the US, data out todays shows job openings at a record high. Employers appear to have trouble finding suitable workers. A tightening American labour market may well encourage the Federal Reserve to raise interest rates next week.

Hmmmm....

The idea of a labor shortage has been introduced as a means to reconcile this growing disparity in way favorable to mainstream economics. Employers want to hire as much labor as they can, this line of thinking goes, but they can’t find enough qualified or sober Americans to do so. The level of Job Openings skyrockets in seeming desperation to fill so many open positions, while the actual filling of those positions lags far behind, leaving with it an economy that does so, too.

This disagreement over the state of the US labor market traces back to early 2014 when all the “overheating” rhetoric got started under the unemployment rate. Though not at so much of an extreme then, the interpretation is the same throughout the whole period. It really is a matter of basic economics (small “e”). If US employers are so desperate for labor that they are posting ads in such extremes over actually hiring, then by every single reason or relationship they would be willing to pay for that labor at whatever market-clearing price could be offered.

Wages haven’t budged one bit in all those three years of this assumed shortage. The latest figures from the BLS in its Employment Cost data, including estimates for total hourly compensation, suggest in the last revisions the opposite case of a shortage. Nominal hourly compensation in the last two quarters (Q4 2016 & Q1 2017) was revised lower by a fair amount, from merely stuck to less than stuck. There isn’t the slightest hint of wage acceleration anywhere. That has included income and compensation revisions that are all of late in the “wrong” direction. Read more

Furthermore, a June rate hike is all but guaranteed. Thereafter, is causing the bond yields to collapse. View evidence

Exporting jobs and dollars to finance them in exchange for debt is proving to be a poor trade off.

Americans faced with lackluster income growth have been financing more of their spending with debt instead. There are early signs that loan burdens are growing unsustainably large for borrowers with lower incomes. Household borrowings have surged to a record $12.73 trillion, and the percentage of debt that is overdue has risen for two consecutive quarters. And with economic optimism having lifted borrowing rates since the election and the Federal Reserve expected to hike further, it’s getting more expensive for borrowers to refinance. Read more

Well the cheese price increase reinforces what we have known since Adam Smith penned his first missive , we need to add value to our products in order to maximize the return

From the FT. "It is thought that some 79,000 businesses would be unable to repay their debts if rates were to rise, four times as many as in September when the Association of Business Recovery Professionals, or R3 as it is known, conducted a similar survey.

The research also revealed that 96,000 companies are only paying interest on their borrowings and failing to clear their debts.

The findings are likely to revive concerns from economists that ultra-low rates of 0.25 per cent are keeping unviable, over-indebted “zombie” firms on life support and tying up capital that could otherwise be directed at more productive businesses that would drive stronger economic growth."

Like Huishan Dairy, New Zealand has Shanghai Pengxin its subsidiaries Hunan Dakang (she) suspended,since March Pengxin Internationa lMining (see) still suspended since February, undergoing restructuring, Zhejiang Longsheng autoparts (she) which gave away 1Billion shares, suspended. Wang Bing who appeared on OIO documents in relation to the Crafer farms , has resigned as Chairman of Pengxin mining in May , due to change in ' job title', having replaced the previous Chairman one year earlier, who was being being investigated by Chinese securities commission. Pengxin International Mining is required by law to report every 5 days on its restructuring, the SSE is not happy. The restructuring involves a modest stake in CAPM which acquired the Aurora gold mine in 2012 , which itself has an unpleasant history in South Africa. When the OIO was granting Shanghai Pengxin the Crafer farms, the Congolese government was blocking Shanghai Pengxin from exporting copper due to environmental concerns.( Whats a few hippos between friends) Shanghai Pengxin not only gave false production data for its copper mine in the Congo to the OIO, it failed to provide information in regards to the management of the copper mine. There is a reason why all these companies are suspended, whether the Chinese government props them up or props up the share price following suspension ,only time will tell, because they are not worth a tenth of their current valuations.