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Financial Markets and Economy

JPMorgan: Something Has Gone Wrong With the Global Consumer (Bloomberg)

"It would be difficult to overstate the recent downside surprise in global consumer spending," writes JPMorgan Senior Global Economist Joseph Lupton.

Though retail sales in the U.S. have missed expectations for five consecutive months, disappointing consumer spending is far from just a made-in-the-USA story, he observes.

Japan Still Beating China on One Score: World’s Top Creditor (Bloomberg)

Japan’s foreign investments and assets climbed to a record in 2014, keeping it in front of China and Germany as the world’s top creditor nation.

The reading stretches Japan’s lead as No.1 creditor country to 24 years, with 71 percent more in net assets than China, even after its Asian neighbor surpassed it to become the world’s second-largest economy in 2010.

A Time Warner Cable office is pictured in San Diego, California October 15, 2014. REUTERS/Mike BlakeAltice seeks financing for Time Warner Cable bid: sources (Reuters)

French telecommunications group Altice SA is talking to several banks about raising debt for a potential bid for Time Warner Cable Inc, the second-largest U.S. cable operator, according to people familiar with the matter.

The talks are an important step for Altice in putting together a bid for Time Warner Cable, which is also being courted by Charter Communications Inc after Comcast Corp abandoned its $45.2 billion offer for Time Warner Cable last month over U.S. antitrust concerns.

Deutsche Lufthansa AircraftQE Great for Europe Stock Markets, Not So Much for Pension Funds (Bloomberg)

Deutsche Lufthansa AG scrapped its dividend this year partly because of charges tied to its pension fund. Investors have been shunning the shares — and those of peers that are likely to follow suit.

An unintended consequence of Mario Draghi’s bond-buying campaign has been an increase in the estimated cost of providing for retired workers. According to an index designed by Citigroup Inc., companies with the biggest pension deficits that have been forced to reduce profit forecasts are trailing the rest of the market by the most since 2013.


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Comment by snow

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  1. snow

    Cuba/Phil – doesn't sound like much of a holdup. I'll nose around – an old Peace Corps buddy is, I suspect, a possibility for ambassador.







7 ideas completely lost on people who are “fiscally conservative but socially liberal”

To be "fiscally conservative/socially liberal" means overlooking many of the facts that make it impossible to separate social and fiscal issues. The following article discusses why the social and fiscal aspects of any political theory are so tangled that one is often just an unfortunate side of the other and why the relatively innocuous "fiscally conservative/socially liberal" position is inconsistent — a mix of ideas that do not hold up well together. 

For a "top down" approach to sorting out the inconsistencies of your economic and political theories (forgetting the "liberal" and "conservative" labels for a moment), explore how the laws define our economic playing field. (E.g. read Stiglitz on Inequality, Wealth, and Growth: Why Capitalism is Failing.)

Thoughts? Please give us yours in the comment section. 

7 ideas completely lost on people who are “fiscally conservative but socially liberal”

It's a popular refrain among "centrists." The truth is that social and fiscal issues are inextricably bound

By Greta Christina, originally published at Alternet (via Salon) 

Well, I’m conservative — but I’m not one of those racist, homophobic, dripping-with-hate Tea Party bigots! I’m pro-choice! I’m pro-same-sex-marriage! I’m not a racist! I just want lower taxes, and smaller government, and less government regulation of business. I’m fiscally conservative, and socially liberal.”

How many liberals and progressives have heard this? It’s ridiculously common. Hell, even David Koch of the Koch Brothers has said, “I’m a conservative on economic matters and I’m a social liberal.”

And it’s wrong. W-R-O-N-G Wrong.

You can’t separate fiscal issues from social issues. They’re deeply intertwined. They affect each other. Economic issues often are social issues. And conservative fiscal policies do enormous social harm. That’s true even for the mildest, most generous version of “fiscal conservatism” — low taxes, small government, reduced regulation, a free market. These policies perpetuate human rights abuses. They make life harder for people who already have hard lives. Even if the people supporting these policies don’t intend this, the policies are racist, sexist, classist (obviously), ableist, homophobic, transphobic, and otherwise socially retrograde. In many ways, they do more harm than so-called “social policies” that are supposedly separate from economic ones. Here are seven…
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Comment by phil

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  1. phil

    We all go through rough patches, Pirate and, like it says on the shirt: "GTAT happens" but, when it does, you can't assume all stocks are GTAT – it's just one of those things, we got caught with our pants down and LL may burn us too but the other 60 stocks we're tracking in our portfolios aren't all likely to crash at once and, if we consistently sell premium on ALL of them (not just a few that we guess on), then, statistically, we'll do very well collecting a constant stream of revenues.  

    Even in the collapse in 2008 – only autos and financials were seriously in danger of going under and only some of them – the people who got burned were the ones who bailed – especially the ones who over-leveraged and were forced to sell.  

    You say I'm smart but I'm really only smart enough to know that I shouldn't try to outhink the markets.  While we have poked short, we haven't tried to fight the tide and have simply moved to the sidelines on what I THINK may be a blow-off top in the market.  If it isn't, we still have our cash (with huge gains) and we can move forward and look for (relative) bargains going forward but the philosophy doesn't change – find ways to SELL premium to people who do think they are smarter than the market. 

    Gratias Newt.  "Quandoquidem inter nos sanctissima divitiarum maiestas, esti funesta pecunia templo nondum habitas." (Among us, the god most revered is Wealth, but so far it has no temple of its own.)







Failing Friday – China Defaults Keep Adding Up

FXI WEEKLYI told you so.

I told you so yesterday and, much more profitably, I told you so on the morning of May 11th, when FXI opened at $50.75 on news of more Chinese stimulus and we called for a short using the FXI June $50 puts, which were $1.20 at the time and are now $1.60 – up 33% in 12 days.  We're already done with those and have moved on to new FXI short positions.  

Yesterday we talked about the sudden and still unexplained failures of Hanergy and Goldin and now, this morning, Ordos' (the ghost city) Huyan Investment Group is unable to pay the piper on $194M round of bonds as they have $1.1Bn in debt and just $3.5M in cash remaining.   

Huyan is just a drop in the Ordos bucket, where $3-5BBn worth of bonds are likely to default every year for the next 12 years – so the hits just keep on coming in China.  Ordos city bonds have climbed to 9.63% as the city's rating has been cut to A on negative watch.  In the rating statement, Pengyuan described the Ordos property market as “extremely not optimistic” because of the slowing economy and pressure the coal industry is facing.  Several other firms have also been downgraded and will be having trouble rolling their debt in the next round.

Meanwhile, Zhuhai Zhongfu Enterprise (a bottling company) is short $72M of the next $106M they owe on May 28th and they have just $10M left in the bank.  This company employs 4,000 people and bottles for both KO and PEP in China.  Meanwhile, shares of ZZ are up 126% this year but have been suspended since April 29th with a $10Bn market cap.  This is the state of Chinese companies, folks – there are many more examples and here's even more.   

The above chart illustrates the game that is being played in China to keep things LOOKING good, even while they are falling apart.  Then we have to take into account that 90% of the public companies in China are some form of quasi-state controlled entities.  While a lot of "investors" take solace in that, believing the Government will back
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Comment by BertII

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  1. BertII

    Oil

    Daily chart has oil in a wedge that will resolve Friday or next tuesday







Superpower

 

Michael Santoli Interviews Ian Bremmer on Yahoo Finance.

Outside the Box: Superpower

By John Mauldin

Ian Bremmer’s new book on the future of the US and geopolitics, Superpower, just hit the streets yesterday, and it’s already creating quite a buzz. It draws on Bremmer’s remarkable understanding of politics, America, and the world. I first ran into Ian at a conference about four years ago, where he was the after-dinner keynote speaker. It was one of those dinners where I had to go (I had spoken earlier), and I had no knowledge of Ian other than his official bio. A professor of geopolitics. From New Yawk. So this Texas boy settled in while Ian walked on stage … and in three seconds I realized that this was an uber-nerd. Total geek. Seriously, when Hollywood wants to type cast a brilliant super-nerd, they should use Ian as the model. He hit all my stereotype buttons, and I of all people should know better.

Within five minutes, this nebbish professor was blowing me away. I was totally captivated. He took me on a trip through the geopolitical landscape as profound as any I had ever been on.  

Ian gave one of the most compelling presentations at our most recent Strategic Investment Conference. No fancy Powerpoint, just one machine-gun idea after another, strung together in what I now realize is his own carefully crafted style.

As I shared with you in Thoughts from the Frontline last week, Ian’s summary of the geopolitical situation and America’s role in managing it can be expressed in two words: it’s bad.

The US is not in decline, he asserts in today’s Outside the Box, citing “the strength of the dollar, US equity markets, employment levels and the economic rebound, the energy and food revolutions, and generation after generation of technological innovation.” But America’s foreign policy and international influence are most certainly in decline. Nevertheless, no other country can even come close to claiming superpower status, so the role the US chooses to play in the world remains of paramount importance.

For the past quarter-century, says Ian,…
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Why Bonds Are No Longer a “Safe Haven”

 

Why Bonds Are No Longer a “Safe Haven”

Courtesy of 

Bonds: A Crowded Trade

In the financial markets, we have been waiting for a crash of U.S. stock prices. And waiting. And waiting. It still hasn’t come.

Last week the spectacular bull market in U.S. stocks that began in March 2009 continued with even more gains. On Friday, the S&P 500 hit another all-time high.

But the real action was in the bond market. Over the last three weeks, about half a trillion dollars has been wiped off the value of global bonds … despite lower than normal trading volumes.

According to Citigroup strategist Mark Schofield, the sell-off is a “stark reminder of just how congested a lot of market positioning has become.” This makes it “increasingly difficult for investors to exit those positions when the time comes to do so.”

 

piggy bank

As Bloomberg reports:

“That means that it will be increasingly difficult for central banks to start backing away from their unprecedented stimulus efforts as growth takes hold – no matter how much they may want to – without causing a massive traffic jam of investors all trying to sell at once.”

Uh … yes.

10 year ITA

Italy’s 10 year government bond yield – an example of recent bond market indigestion – click to enlarge.

A Modern-Day John Law

Nobody knows whether the recent correction in bond prices (and the accompanying rise in yields) will continue or not.

It is almost too classic to believe. Serious economists – and anyone with any common sense – have realized for centuries that you can’t increase the quantity of debt without also decreasing its quality. The more you owe, the less likely you are to pay.

But central banks have been encouraging businesses, households, and governments all over the planet to take on more debt. They claim this will “stimulate” the economy… and that the resulting “growth” will make it easy to repay the debt.

Mario Draghi,


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News You Can Use From Phil’s Stock World

 

Financial Markets and Economy

Banks Will Keep Doing FX Stuff That Got Them in Trouble (Bloomberg)

Here they're doing that grumbling in letters to clients the day after their guilty pleas. There is no promise of reform here: The Justice Department caught the banks doing things that it didn't like and fined them billions of dollars, but won't stop them from doing most of those things. As long as there are no more ambiguities or misunderstandings about what they are. It's a weird stalemate. The Justice Department doesn't like these practices, the banks like them fine, and they've agreed to disagree. These practices have been singled out, in the context of criminal plea agreements (a bad context!), as things that happened. But not quite as crimes. And the banks are careful to make clear: They're going to keep happening.

The Senate Has a $66 Billion Gift for U.S. Banks (Bloomberg)

A U.S. Senate proposal to raise the level at which banks are deemed systemically important could help free up as much as $66 billion in capital at 11 lenders and allow for increased shareholder payouts.

Dodd-Frank Overhaul: Raising the SIFI Threshold

There may be a simple, overlooked reason for the EU bond meltdown (Market Watch)

A recent meltdown in the eurozone’s bond market caught global markets by surprise, spreading fears of a repeat of the 2013 taper tantrum.

The jitters were so intense that it took a clear message from European Central Bank policy makers that the central bank stands firmly behind its aggressive stimulus program, for the market to calm and resume some bullish momentum.

Self-Driving Trucks Are Going to Kill Jobs, and Not Just for DriversSelf-Driving Trucks Are Going to Kill Jobs, and Not Just for Drivers (Gizmodo)

The first road-legal autonomous truck made a splashy debut earlier this month. The Freightliner Inspiration Truck is shiny and new, but it will not be good for everyone. Autonomous trucks will destroy


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News You Can Use From Phil’s Stock World

 

Financial Markets and Economy

Federal Reserve Chair Janet YellenGlobal Inflation Mystery Risks Making Central Bankers Bystanders (Bloomberg)

Janet Yellen’s Federal Reserve is “reasonably confident” it can drive up consumer prices. Mario Draghi says his European Central Bank’s stimulus has already “proven so far to be potent.” The Bank of England reckons inflation is “likely to return” to its target within two years.

While not quite declarations of victory, such statements show policy makers’ optimism that record-low interest rates and bond-buying will be enough to return inflation to the 2 percent range most of them eye.

The unemployed are dropping out like flies (CNBC)

At a time when 8.5 million Americans still don't have jobs, some 40 percent have given up even looking.

The revelation, contained in a new survey Wednesday showing how much work needs to be done yet in the U.S. labor market, comes as the labor force participation rate remains mired near 37-year lows.

Tourist Spending in Japan Is At a Two-Decade High (Bloomberg)

Record spending by foreign tourists is providing a timely boost to the world’s third-largest economy.

Spending by visitors jumped to the highest level in at least 20 years, adding about 0.1 percentage points to Japan's gross domestic product, data showed. That’s no small change for a country that’s trying to claw itself out of decades of economic stagnation.

Why it might pay to listen to a Fed old timer’s tantrum warning (Market Watch)

Unless the name is Ben Bernanke or Alan Greenspan, ex-Fed guys don’t always grab your attention.

But Lawrence Lindsey, who was at the Fed in the 1990s, made a few people sit up and take notice after firing off some spicy comments at a panel discussion yesterday. He blasted away at the current Fed, saying it’s pushing its luck when it comes to normalizing interest rates. And rates at zero, with unemployment at 5.4%? Madness!

China’s Bocom acquires Brazil’s Banco BBM (FT)

Bank of Communications, China’s fifth-largest commercial 


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News You Can Use From Phil's Stock World

 

Financial Markets and Economy

JPMorgan: Something Has Gone Wrong With the Global Consumer (Bloomberg)

"It would be difficult to overstate the recent downside surprise in global consumer spending," writes JPMorgan Senior Global Economist Joseph Lupton.

Though retail sales in the U.S. have missed expectations for five consecutive months, disappointing consumer spending is far from just a made-in-the-USA story, he observes.

...



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Zero Hedge

For Today's Investors: Ignorance Is Not Bliss - It Is Oblivion

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Tim Price via The Cobden Centre,

“We’re not gonna make it, are we ? People, I mean.”

“It is in your nature to destroy yourselves.”

“Yeah. Major drag, huh ?”

From James Cameron’s ‘Terminator 2: Judgment Day’.

Here is a thought experiment. It is January 2000. The last wild Pyrenean ibex has been found dead, squashed by a tree. America Online has just announced an agreement to buy Time Warner for $162 billion – the largest corporate merger in history. It is all very exciting. Suddenly, a sourceless wind rises; papers blow across t...



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All About Trends

Mid-Day Update

Reminder: David 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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Kimble Charting Solutions

King Dollar & Crude Oil reversing ST trends, says Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

King Dollar and Crude Oil have been have had little correlation over the past year, as each has traded in pretty much opposite directions.

Over the past 9 months King Dollar has had a historical rally and the opposite is true for Crude Oil.

Of late Crude hit its 23% Fibonacci resistance line, based upon last summers weekly closing highs and weekly closing low on 3/13/15.

Joe Friday just the facts….Crude oil is making an attempt to break short-term steep rising support this week and King Dollar is attempting to break short-term steep falling resistance.

Crude oil just experienced its 7th largest 2-month rally in its...



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Chart School

S&P 500 Snapshot: A Modest Loss on the Smallest Trading Range of 2015

Courtesy of Doug Short.

With the three-day Memorial Day weekend in the immediate offing, the S&P 500 spent the day in semi-vacation mode. The intraday high-low trading range of 0.29% was the smallest of the year. The peak coincided, not surprisingly, with Janet Yellen's "Outlook for the Economy" speech at 1 PM. In her speech, Ms. Yellen discounted economic projections with a rather stunning self-abnegation, especially so in coming from a Fed Chair.

"Of course, the outlook for the economy, as always, is highly uncertain. I am describing the outlook that I see as most likely, but based on many years of making economic projections, I can assure you that any specific projection I write down will turn out to be wrong, perhaps markedly so."   [bolding added b...

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Pharmboy

Big Pharma's Business Model is Changing

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

Understanding the new normal of a business model is key to the success of any company.  The managment of companies need to adapt to the changing demand, but first they must recognize what changes are taking place.  Big Pharma's business model is changing rapidly, and much like the airline industry, there will be but a handful of pharma companies left at the end of this path.

Most Big Pharma companies have traditionally done everything from research and development (R&D) through to commercialisation themselves. Research was proprietary, and diseases were cherry picked on the back of academic research that was done using NIH grants.  This was in the heyday of research, where multiple companies had drugs for the same target (Mevocor, Zocor, Crestor, Lipitor), and could reap the rewards on multiple scales.  However, in the c...



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Sabrient

Sector Detector: Bullish technical picture appears to trump cautious fundamentals

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

Courtesy of Sabrient Systems and Gradient Analytics

By Scott Martindale

Stocks closed last week on a strong note, with the S&P 500 notching a new high, despite lackluster economic data and growth. I have been suggesting in previous articles that stocks appeared to be coiling for a significant move but that the ingredients were not yet in place for either a major breakout or a corrective selloff. However, bulls appear to be losing patience awaiting their next definitive catalyst, and the higher-likelihood upside move may now be underway. Yet despite the bullish technical picture, this week’s fundamentals-based Outlook rankings look even more defensive.

In this weekly update, I give ...



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OpTrader

Swing trading portfolio - week of May 18th, 2015

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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Digital Currencies

Nasdaq's bitcoin plan will provide a real test of bitcoin hype

 

Nasdaq's bitcoin plan will provide a real test of bitcoin hype

By 

Excerpt:

Bitcoin, the virtual digital currency, has been called the future of banking, a dangerous fad, and almost everything in between, but we're finally about to get some solid data to help settle the debate.

On Monday, the Nasdaq (NDAQ) stock exchange said it would ...



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Market Shadows

Kimble Charts: US Dollar

Which way from here?

Chris Kimble likes the idea of shorting the US dollar if it bounces higher. Phil's likes the dollar better long here. These views are not inconsistent, actually, the dollar could bounce and drop again. We'll be watching. 

 

Phil writes:  If the Fed begins to tighten OR if Greece defaults OR if China begins to fall apart OR if Japan begins to unwind, then the Dollar could move 10% higher.  Without any of those things happening – you still have the Fed pursuing a relatively stronger currency policy than the rest of the G8.  So, if anything, I think the pressure should be up, not down.  

 

UNLESS that 95 line does ultimately fail (as opposed to this being bullish consolidation at the prior breakout point), then I'd prefer to sell the UUP Jan $25 puts for $0.85 and buy the Sept $24 call...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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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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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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