Archive for the ‘Phil’s Favorites’ Category

Italy’s ‘no’ vote lights another fire under the European Union


Italy's 'no' vote lights another fire under the European Union

By Marco Goldoni, University of Glasgow

How to interpret the outcome of the Italian referendum? Matteo Renzi’s government is clearly the loser – and the prime minister announced his widely expected resignation as soon as the result was in.

The proposed constitutional reform would have given much more power to Renzi by taking it away from the Italian Senate. It was part of a wider package of political reforms pushed by his government which can be summed up as the idea that Italy needed to be “unlocked”. The constitutional changes were presented as consolidating this new trajectory, together with a new electoral law designed to underpin the reformed constitution. The referendum confirmed that 59.1% of voters had other ideas.

Renzi’s government was initially wildly popular but lost support as it became clearer over nearly three years in power that the material conditions of large sections of the population were not progressing but stagnating or, in some cases, getting worse.

Constitutional matters in Italy have traditionally been kept separate from ordinary politics, but not on this occasion. Because the government drafted and submitted the reform proposals rather than the parliament, and Renzi said that he would resign if he lost, it became a vote on the government’s policies – and of course its leader.

Winners and losers

For weeks, the prospect of a defeat for the government has been framed as another reaction against the establishment – hardly surprising in the context of Trump, Brexit and other populist movements toppling centrists around the world.

Such a reading might be supported by a quick look at some of the components behind the No campaign. The Northern League and Beppe Grillo’s Five Star Movement represent two rather different types of right-wing politics that are prone to frame their messages in a populist way – albeit Five Star is the only one that fully fits the anti-establishment archetype seen in other countries. Yet while the government was clearly the political subject behind the proposed constitutional reform, there was no overarching narrative behind the No campaign.

Beppe Grillo: rain or shine, Italy says No. EPA

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American Greed – The Fix (Video)

Courtesy of EconMatters

We discuss the markets in general today in this video before moving onto the topic of American Greed, and an analysis and cure for the typical way investors lose all their money to these Ponzi Schemes. Ask for 3 year audited returns from an accredited 3rd Party auditing firm.

Euro Reversal: Major Top for US Dollar? What’s Going On?

Courtesy of Mish.

In response to the Italian Referendum which caused prime minister Matteo Renzi to resign, the Euro/USD took a dive from 1.0672 to as low as 1.0506.

The Euro has since rallied strongly, gaining 2.7 percent. What’s going on?

Euro/US Dollar 15-Minute Chart


What’s Going On With the Euro?

More than likely this is a combination of several factors:

  1. Traders positioned themselves heavily short the euro expecting the referendum to fail. Sentiment was extreme enough, there were few left to short.
  2. The referendum failed by a larger than expected amount, but Italy will not blow up or leave the eurozone immediately. Itlay will leave the eurozone in due time, but the market won’t worry about that until the last moment as is the case in the typical European crisis.
  3. Axel Weber, Former Bundesbank Head Warns of Coming Rate Hikes by ECB.

Of the three items, points 3 and 1 are the most likely cause at the moment.

Major Top for US Dollar?

Continue reading here…

Half Trump Empty, or Half Trump Full?


Half Trump Empty, or Half Trump Full?

Courtesy of Wade of Investing Caffeine


It was a bitter U.S. presidential election, but fortunately, the nastiest election mudslinging has come to an end…at least until the next political contest. Unfortunately, like most elections, even after the president-elect has been selected, almost half the country remains divided and the challenges facing the president-elect have not disappeared.

While some non-Trump voters have looked at the glass as half empty, since the national elections, the stock market glass has been overflowing to new record highs. Similar to the unforeseen British Brexit outcome in which virtually all pollsters and pundits got the results wrong, U.S. experts and investors also initially took a brief half-glass full view of the populist victory of Donald Trump. More specifically, for a few hours on Election Day, stock values tied to the Dow Jones Industrial Average index collapsed by approximately -5%.

It didn’t take long for stock prices to quickly reverse course, and when all was said and done, the Dow Jones Industrial Average finished the month higher by almost +1,000 points (+5.4%) to finish at 19,124 – a new all-time record high (see chart below). Worth noting, stocks have registered a very respectable +10% return during 2016, and the year still isn’t over.


Source: (IBD)

Drinking the Trump Egg Nog

Why are investors so cheery? The proof will be in the pudding, but current optimism is stemming from a fairly broad list of anticipated pro-growth policies.

At the heart of the reform is the largest expected tax reform since Ronald Reagan’s landmark legislation three decades ago. Not only is Trump proposing stimulative tax cuts for corporations, but also individual tax reductions targeted at low-to-middle income taxpayers. Other facets of the tax plan include simplification of the tax code; removal of tax loopholes; and repatriation of foreign cash parked abroad. Combined, these measures are designed to increase profits, wages, investment spending, productivity, and jobs.

On the regulatory front, the President-elect has promised to repeal the Obamacare healthcare system and…
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A damning defeat for Matteo Renzi but Italy’s referendum is not a populist triumph


A damning defeat for Matteo Renzi but Italy's referendum is not a populist triumph

By Felia Allum, University of Bath

Italian prime minister Matteo Renzi has carried out his promise to resign after losing a referendum on his country’s constitution. This brings an end to a tenure that lasted just 1,000 days.

In a moving speech, Renzi said: “I have lost … I take full responsibility for this result.” His decision marked a break from the post-war norm in Italian politics. Renzi was actually seeing through on his promise. “This time, when you lose you step down,” he said. “You do not carry on as though nothing has happened.”

The 65.5% Italians who voted in this referendum not only rejected the proposed constitutional change, they completely annihilated it. An enormous 59.1% voted No and 40.9% voted Yes, siding with Renzi. Only three regions voted Yes: Tuscany, Emilia Romagna and South Tyrol – two of which are traditional strongholds of Renzi’s party.

The decisiveness of the result has completely shocked the nation. While a No vote was always a possibility, the margin was expected to be close. Back in April, the Yes camp was seen to have an advantage.

In the end, the No supporters seemed to have come from a far wider coalition of voters than expected – including people from the left and even senior figures in Renzi’s own party. Indeed, they were so broadly spread across the political spectrum that it has been said there were no winners in this referendum. No single political party can claim the victory. If a winner were to be declared, it would surely be political participation – even Italian democracy – given the extraordinarily high turnout.

Why No?

But while many have sought to portray the Italian referendum as the latest battle in the war between populists and the establishment, that would be an oversimplification of what has happened to Renzi.

Beppe Grillo campaigns for No. EPA/Alessandro Di Marco

Yes, this was an anti-establishment vote, but it was not necessarily an expression of populism. The No vote was intrinsically linked to Renzi – it was not a sign of support for any of his rivals, but…
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Non-Manufacturing PMI Rises in November

Courtesy of Mish.

The non-manufacturing PMI follows on the heels of a good showing for manufacturing.

Both indices rose in November according to the ISM Report on Business.

The non-manufacturing PMI follows on the heels of a good showing for manufacturing.

Both indices rose in November according to the ISM Report on Business.This was a solid report with a couple of caveats.

  1. The ISM is a diffusion index as are the Fed regional manufacturing reports. Such indices measure improvement or not. For example, employment rising by 10 employees at one company will offset employment falling by 500 at another company (or vice versa).
  2. The stronger US dollar and troubles in Europe will at some point weigh on exports.

For a discussion of the manufacturing PMI, please see Manufacturing ISM Increases Slightly to 53.2.

Mike “Mish” Shedlock


Original article here.

Automation, Climate Change and Donald Trump: What Kind of Future Are We In For?


Automation, Climate Change and Donald Trump: What Kind of Future Are We In For?

Courtesy of 

It has been a long, strange trip towards 2017. Donald Trump is due to get his hands on the nuclear codes Jan. 20, so thinking too far into the future may be a pointless exercise — but let's suppose humanity makes it out the other side of his presidency more or less in one piece and engage in some literary speculation.

There will still be two impending crises — urgent now and more urgent in the years to come — with the potential wreak havoc on our society, economy and politics. First, the increasing automation of jobs may lead to the end of work as we currently know it. Second, climate change will fundamentally alter how we interact with the planet and the resources that it provides.

Sociologist and writer Peter Frase suggests that these existential threats could spur a dramatic reordering of society — for better or for worse. In his new book, Four Futures: Life After Capitalism, Frase examines the different ways humanity might respond. Drawing on science fiction, Frase paints pictures of two utopias, in which automation and climate change push us toward a more egalitarian society, and two dystopias, in which these forces do the opposite. “There are four scenarios,” he writes: “Star Trek, Big Government, Ecotopia, Mad Max.”

Frase's second influence, besides science fiction, is Karl Marx: The other names he gives his four futures are rooted firmly in political theory. Future 1, or the "Star Trek" utopia, is communism, in which there is enough stuff to go around, due to automation (3-D printers, perhaps, could be responsible for all manufacturing), and that stuff is shared according to each person's needs. Future 2 is rentism, in which automation provides unlimited resources, but elites control who has access to them; Frase likens this future to the way in which intellectual property laws control access to information, including medical texts that could save lives, today. It's the "Big Government" dystopia.

Future 3 is socialism, in which automation obviates the need for work, but Earth's limited resources reduce consumption. This is what Frase compares to …
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Italy’s Referendum Should Be a Warning to Donald Trump

Courtesy of Pam Martens

FTSE Italia All-Shares Banks Index (Green Line), January 2016 to December 5, 2016 Versus Germany's Deutsche Bank (Orange Line)

FTSE Italia All-Shares Banks Sector Index (Green Line), January 2016 to December 5, 2016 Versus Germany’s Deutsche Bank (Orange Line)

By Pam Martens and Russ Martens: December 5, 2016

Populist backlash, which has been running rampant on both sides of the Atlantic, just handed Italian Prime Minister Matteo Renzi his walking papers in a widely anticipated referendum vote. Renzi pushed for the referendum to reform the legislative system in Italy and said he would resign if it didn’t pass. Voters saw it as a power grab by Renzi and soundly defeated it with just under 60 percent voting against the measure. Under the terms of the referendum, Italy’s Senate would have shrunk from 315 members to 100 while the Senate’s right to hold a vote of no confidence in the government would have been severed.

Italian Prime Minister Matteo Renzi Casts His Vote in Italy's Referendum, November 4, 2016

Italian Prime Minister Matteo Renzi Casts His Vote in Italy’s Referendum, November 4, 2016

Much like Donald Trump’s appeal to the working class in America, Renzi took office in 2014 on an anti-establishment campaign. Ironically, or perhaps not, Renzi used the identical words as Trump, promising to clean out “the swamp.” The swamp in Italy includes the same cronyism, political pay-to-play and entrenched corruption that has Americans outraged and seeking drastic change from the status quo. Opposing voices who triumphed in yesterday’s referendum painted Renzi as too chummy with bankers and financiers, a narrative that is increasingly coming into sharp focus in Donald Trump’s Cabinet appointments.

Donald Trump’s Senior Counselor/Chief Strategist in the White House will be Steve Bannon, a previous Goldman Sachs banker and right-wing propaganda filmmaker. For one of the most powerful posts in government, the U.S. Treasury Secretary, Trump has tapped a former 17-year veteran of Goldman Sachs, Steven Mnuchin. An heiress to a family worth more than $5 billion, Betsy DeVos, was tapped by Trump for Education Secretary while billionaire investor and corporate raider Wilbur Ross has been named by Trump as his nominee for Commerce Secretary.

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News You Can Use From Phil’s Stock World


Financial Markets and Economy

Oil tops $55 for first time in 16 months as OPEC deal fuels buying (Reuters)

Brent crude oil prices rose above $55 a barrel on Monday, trading at a fresh 16-month high, on rising prospects of a tightening market after OPEC members agreed on a landmark deal to cut production last week.

European Investors Brush Off Italy Referendum Result (The Wall Street Journal)

Stocks pushed higher Monday while the euro recovered from early losses as investors largely brushed off Italian voters’ rejection of constitutional reform.

Euro Gains With Stocks as Italy Vote Absorbed in ‘Three Minutes’ (Bloomberg)

The euro shook off earlier losses and equities climbed as contagion from political turmoil in Italy was contained.

The common European currency climbed against the dollar, having earlier reached its weakest in 20 months as Italian Prime Minister Matteo Renzi quit after losing a referendum he’d called to rein in the senate’s power. 

Euro rebounds after hitting 21-month low on Italian referendum defeat (Reuters)

The euro rebounded from 21-month lows on Monday, clawing back almost all the ground it had lost overnight after Italian Prime Minister Matteo Renzi conceded defeat in a referendum on plans to reform the country's constitution and said he would resign.

Credit Restrictions Cost Home Buyers ‘Deal of a Lifetime’ (The Wall Street Journal)

Sean Dobson wanted to start a mortgage bank four years ago to serve borrowers with middling credit or irregular income. He eventually decided that growing regulatory hurdles and other costs would erase his returns.

Italy Sinks Into Political Limbo as Defeat Sweeps Renzi Away (Bloomberg)

Italy fell into political limbo after Prime Minister Matteo Renzi announced his resignation, with rival parties jockeying to fill the power vacuum following his crushing defeat in a constitutional referendum.

Rescue of Italian bank Monte Paschi in danger after Renzi's defeat (Reuters)

A 5 billion euro ($5.33 billion) rescue plan for Italian bank Monte dei Paschi di Siena (BMPS.MI) hung by a thread on Monday after Prime Minister Matteo Renzi's defeat in a referendum tipped the country into political turmoil.

Trump Takes On China in Tweets
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Axel Weber, Former Bundesbank Head Warns of Coming Rate Hikes by ECB

Courtesy of Mish.

Axel Weber, former head of Germany’s central bank says the ECB is going to halt QE soon and hike rates by September.

Weber warns Markets Unprepared for Central Bank Shifts.


Investors are dangerously unprepared for a sharp rise in eurozone bond yields when US interest rates march higher and European quantitative easing ends, Axel Weber, chairman of UBS and the former head of the Bundesbank, has warned.

The jump in US rates could spark big jolts in the markets as the long spell of aggressive monetary easing across the globe has left many investors off-guard over a swing in the global rate cycle, he added.

“I don’t think we will have increasing divergence among the major central banks in the world for much longer,” Mr Weber said, predicting that Europe would follow the US with a rate rise by next September at the latest. “I think the ECB is closer to slowing its current quantitative easing programme than many in the market expect.”

Until now, the eurozone has not seen a similar swing in rates as short-term rates have stayed low — or even negative in some markets — while the ECB has been engaged in aggressive QE, including extensive bond purchases.

But Mr Weber predicted that the ECB would end its bond purchases sooner than many investors had assumed, sending the eurozone yield curve higher. “A large part of the market is uni-directionally positioned and it is positioned in a direction where you will have to take off some of those positions over the course of 2017,” he said.

Mr Weber also voiced support for Mr Trump’s plans to move away from only monetary stimulus toward more structural measures and fiscal stimulus, such as large-scale infrastructure projects. He aired concern that US companies with international operations could be negatively affected by the president-elect’s plans to alter trade agreements.

“Markets know how to price and discount market risk,” he said. “Markets are much less good at pricing political uncertainty . . . Our broad presence in continental Europe gives us optionality in case we need to move employees from London to onshore locations. Optionality is going to be the name of the game.”


I will not be shocked if the ECB tapers QE. It isn’t doing Europe a bit of good.

As for hikes, I doubt

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Zero Hedge

Oil's Most Popular Trading Products May Soon Be Shut Down

Courtesy of ZeroHedge. View original post here.

Submitted by Michael McDonald via,

For most retail investors, buying physical crude oil as a commodity is not an option. Instead, many investors turn to exchange traded notes (ETNs) as a way to speculate on changes in oil prices themselves.

But direct oil investment products like USO have always been dicey as investment choices. More sophisticated investors with big Wall Street banks who have high speed tr...

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David Hume Believed In The Miracle Of Commerce

By The Foundation for Economic Education. Originally published at ValueWalk.

David Hume was one of the most prominent of the Scottish Moral Philosophers. He is particularly famous as a philosophical skeptic, who, in his book, An Inquiry Concerning Human Understanding (1748), questioned whether man’s reason and reasoning ability could successfully apprehend reality with any complete degree of certainty. He also argued that reason followed men’s “passions,” rather than reason being a guide for or a check upon men’s emotions and desires.

Image source: The Blue Diamond GalleryDavid Hume

Hume is also famous for arguing that there is a distinct difference between factual or “positive” statements from ethical or “normative” stat...

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Phil's Favorites

Boeing Responds To Trump

Courtesy of ZeroHedge. View original post here.

Update: Boeing has issued a statement following President-Elect Trump's tweet.

“We look forward to working with the US Air Force on subsequent phases of the program allowing us to deliver the best plane for the president at the best value for the American taxpayer,”  Boeing spokesman Todd Blecher says in e-mail.

“We are currently under contract for $170 million to help determine the cap...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

European Stocks Little Changed With Industry Rotation on Hold (Bloomberg)

European stocks were little changed, as a recent rotation out of so-called defensive sectors and into shares seen benefiting from economic growth eased. Utilities and real estate companies climbed with banks, while miners trimmed recent lofty gains.

Yuan Rises for a Second Day as Fixing Signals Government Support (Bloomberg)

China’s yuan rose for a second day after an unexpectedly strong central bank fixing spurred specul...

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Phil's Stock World's Las Vegas Conference!


Come join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017.            

Beginning Time:  8:00 am Sunday morning

Location: Caesar's Palace in Las Vegas


Caesar's has tentatively offered us rooms for $189 on Saturday night and $129 for Sunday night. However, we have to sign the contract ASAP. We need at least 10 people to pay me via Paypal or we may lose the best rate for the rooms. (Once we are guaranteed ten attendees, I will put up instructions to call the hotel for individual rooms.)

The more people who sign up,...

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Members' Corner

Once In A Lifetime?

Courtesy of Nattering Naybob.

Discussion, critique and analysis of the potential impacts on equity, bond, commodity, capital and asset markets regarding the following:
  • Dec 4th Italian Constitutional Referendum
  • Referendum Result; Market Reaction
  • Political Reaction; Opposition Party Reaction
Last Time Out
Since the end of World War II, 71 years have passed during which, the "perfect" balance has resulted in 63 different Italian governments, or more often than most change shoes.  Instead of being a real second legislative check, that balance is seemingly a weapon of mass distraction and instrument of political vetoes whi...

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Swing trading portfolio - week of December 5th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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Kimble Charting Solutions

Inflation indicator testing multi-year breakout cluster!

Courtesy of Chris Kimble.

Some tools are used to measure inflation or lack of. Some look at the price of Crude Oil, Doc Copper or the Commodities Index (CRB) to determine if inflation or deflation is in play. Since 2011, most commodities have created a series of lower highs and lower lows and for many, it has been easier to make the case of deflation than inflation, is in play.

Below looks at another tool, that is often used to determine if inflation or deflation is in play. This tool we are referring too is the TIPS/TLT ratio-


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Chart School

Weekly Market Recap Dec 4, 2016

Courtesy of Blain.

The week that was…

The market needed a pause after the frenetic post election rally, and it finally arrived this week.  The pullback was mild as bulls would like.  This week’s “fear of the week” was Italy’s political referendum which happened today… and was rejected.

Italian voters were asked in a referendum to approve changes to the country’s constitution, which have been called the most sweeping since the end of World War II. The proposed reforms would cut the Senate’s size by two-thirds and reduce powers held by the country’s 20 regional governments. Italian Prime Minister Matteo Renzi believes the changes will aid efficiency in parliament.

The reforms could also “make it easier to implement important legislation (such as measure...

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Digital Currencies

Largest US Bitcoin Exchange Is "Extremely Concerned" With IRS Crackdown Targeting Its Users

Courtesy of ZeroHedge. View original post here.

Last Thursday we reported that in a startling development seeking to breach the privacy veil of users of America's largest bitcoin exchange, the IRS filed court papers seeking a judicial order to serve a so-called “John Doe” summons on the San Francisco-based Bitcoin platform Coinbase.

The government’s request is part of a bitcoin tax-evasion probe, and se...

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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...

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Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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FeedTheBull - Top Stock market and Finance Sites

About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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