Archive for 2010

As Apple’s market value explodes, questions abound…..(AAPL)

As Apple’s market value explodes, questions abound…..(AAPL)

Courtesy of The Alpha Ninja 

Brett Arrends of the Wall Street Journal has a must-read for anyone owning Apple (APPL) shares, titled "Seven Reasons Apple Shareholders Should Be Cautious." It pretty much implies to anyone invested in the stock market, as Apple is the S&P500′s second biggest weight, behind ExxonMobil.

I won’t list all 7 reasons Brett cites, but among the more important are:

5. The cellular networks. At what point will they stop giving away the store? Right now they’re paying most of the cost of each new iPhone, and under-charging for the data plans too. That’s great for customers and great for Apple, and bad for the networks.

3. The share price. At $260, Apple’s stock price has more than doubled in a year. Amateur investors say, "It’s going up." Present tense. Serious investors say, more accurately: "It has gone up." Past tense. No one knows the future. And the more it rises, the less attractive it gets. It’s now 20 times annual cash flow and 5 and a half times annual sales. At $235 billion, the company is being valued at more thanSony, Research In Motion, Dell, Motorola, Nokia, HTC,SanDisk and Palm … put together. That assumes a lot.

To the first point, I’m not in agreement. AT&T signs people up for a two year contract pulling in $70-120 per MONTH, on a device that sells for $500ish without a contract, and even that is only to protect the Apple "brand." If anything, networks could GIVE the phones away, with economics like that. Ever heard of a car that costs $30,000 to buy, but $$8,000 per month to USE? Neither have I.

The second point is the bigger worry. At what point does the "law of large numbers" intervene, capping Apple’s market value? I simply don’t know. In the meantime, Apple’s market share in both the US and internationally only has to budge a little to have a huge impact for their profits. Critics cite Apple’s higher price points as a reason this can’t happen, but they forget how fast the iPod and iPhone’s went from uber-expensive to generally affordable. 

Below is a chart that shocked me as I graphed it. It’s the top ten S&P500 companies by market value,…
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The Unrecovery Comes to Queens – A Fairy Tale

The Unrecovery Comes to Queens – A Fairy Tale

Courtesy of Joshua M Brown, The Reformed Broker 

Here’s a little fairy tale straight from the Unrecovery that most Americans are experiencing…

Like all good fairy tales, it’s set in a land far, far away – in this case 36th Street in Sunnyside, Queens.

And of course, we’ll need a Prince – how about 300 of them, unemployed men sleeping in tents on the street while lined up to fill out a union job application to fix elevators.

"But Josh," you may be saying, "what about magic?  It is a fairy tale, after all!"

Sure, here’s some enchantment…750 guys will apply for this opportunity but only 100 of them will get the shot.  The other 650′s hopes of employment will go Poof! right into thin air.  Magic!

If the above tale has transported you back to your childhood and you’d like to hear more, visit the New York Post at the link below…

Camp Desperation (NYP) 

 





A New High In New Highs. For Real, Mijo.

A New High In New Highs. For Real, Mijo.

Courtesy of Joshua M Brown, The Reformed Broker 

Here’s a fun fact that deserves way more attention:

According to trader and blogger Chris Perruna, we just witnessed an historical explosion of new highs on the NYSE on Friday…

The market closed last Friday registering the second most New High’s (NH’s) recorded in a database that I have going back decades. At 634 NH’s, it’s the most new highs registered on one day in almost 30 years. More than any one day during the dot com boom of the late 1990’s, more than any day recorded during the run in 1987 and more than anything this millennium.

In fact, Chris points out that the only day exceeding Friday’s record was way back in 1982, which was the starting gun for an 18 year bull market, possibly the greatest in stock market history.

What’s interesting about this data point is that it can alternately be used as an indication of froth and speculative excess in the market, or it can be viewed as the ultimate forward indicator – a prelude to another leg higher.

How you choose to view this information probably depends on your stance prior to having come into contact with it.  You know…biases and such.

Here’s what it looks like (note the green spike and disappearance of red), then go check out Chris’s site for the details…



Source:

NYSE New High New Low Extreme (ChrisPerruna) 

 





CDOs For Dummies (Yes, Congress, We Are Looking At You)

Courtesy of Tyler Durden

Every now and then, congressmen (and their staffers) have a knack of taking a terrific opportunity to investigate the alleged criminality at the apex of Wall Street (such as Tuesday’s hearing with Darth Blankfein), and blow it by 1) pursuing personal agendas that have nothing to do with the matter at hand and 2) having no understanding of the matter at hand. And when the matter at hand is something as complex as CDOs (just ask Lloyd or Ben Bernanke – both will tell you that only Goldman understood these products well enough to trade them, and that only the Fed is smart enough to regulate them), televised embarrassment is sure to follow. Which is why we have prepared some bedside reading for all those who intend on grilling Lloyd on Tuesday.

We start with the CDO bible which everyone should read (after all JPM created CDS – they know more about synthetics and structured products than anyone else):

And just if there is any left over confusion we present:

And amusingly:

Make us proud congress

 

 

 

 

Attachment Size
JPM CDO.pdf 301.48 KB
UBS CDO Insight.pdf 484.88 KB
SocGen QUANTITATIVE STRATEGY Pricing bespoke CDOs.pdf 672.79 KB
MS CDO Market Insights.pdf 87.69 KB
CDO Nomura.pdf 179.28 KB
CDO Nomura Update.pdf 183.16 KB
CDO Valuation.pdf 341.32 KB
S&P CDO Modelling.pdf 201.24 KB
The Relative Stability of Cash-Flow vs..pdf 53.09 KB




Goldman's Essay On Why The US Debt Load Is "Not Too Concerning"

Courtesy of Tyler Durden

Goldman has been on a roll this week. After losing all credibility (or whatever they had) with the markets, the objective media and Main Street, but not their clients, who were the ones losing the most for interacting with the squid, yet refuse to take their business elsewhere for fear of being locked out from the market monopolist with the greatest amount of inventory (yes, economies of scale when compounded with not so subtle forced liquidations of key competitors end up in monopolistic outcomes), now their economic team is taking a gamble with its own reputation (this is the team that won the best big bank economic team aware for 2009). In a note distributed to clients, entitled “What’s the Right Measure of US Government Debt?” Andrew Tilton and Alec Phillips try to present the case that contrary to what you may have heard, the $12.8 trillion of US debt is not really worth losing sleep over. In fact the next time Goldman needs a bailout and the resultant $2-20 trillion of new debt are added to the make the 2s30s at about 100%, that should not be a source of concern either.

We present the “essay” in its entirety.

What’s the Right Measure of US Government Debt?

Investors prone to worry about the sustainability of government debt may feel increased anxiety given the wide variation in estimates of government liabilities.  In today’s comment we list some of the major reasons why figures differ and organize them in a common framework.

When reviewing debt figures it is important to distinguish between a) federal and state/local debt, b) gross vs. net debt, c) present vs. future obligations, d) on- vs. off-balance sheet commitments, and e) stronger vs. weaker commitments.  For those focused on the federal government’s near-term financial condition, federal net debt of about 50% of GDP (including net GSE liabilities) may be an appropriate measure; for those wishing to compare government debt sustainability across countries, gross general government debt to GDP of 70% is probably a fairer comparison. Unfunded liabilities of 200%+ of GDP are extremely worrisome, but serve mainly to make plain that fiscal policy must and will change.

As many economies and markets recover from the worst of the financial crisis, investors have turned their attention to the creditworthiness of governments.  The fiscal


continue reading





Goldman’s Essay On Why The US Debt Load Is “Not Too Concerning”

Courtesy of Tyler Durden

Goldman has been on a roll this week. After losing all credibility (or whatever they had) with the markets, the objective media and Main Street, but not their clients, who were the ones losing the most for interacting with the squid, yet refuse to take their business elsewhere for fear of being locked out from the market monopolist with the greatest amount of inventory (yes, economies of scale when compounded with not so subtle forced liquidations of key competitors end up in monopolistic outcomes), now their economic team is taking a gamble with its own reputation (this is the team that won the best big bank economic team aware for 2009). In a note distributed to clients, entitled “What’s the Right Measure of US Government Debt?” Andrew Tilton and Alec Phillips try to present the case that contrary to what you may have heard, the $12.8 trillion of US debt is not really worth losing sleep over. In fact the next time Goldman needs a bailout and the resultant $2-20 trillion of new debt are added to the make the 2s30s at about 100%, that should not be a source of concern either.

We present the “essay” in its entirety.

What’s the Right Measure of US Government Debt?

Investors prone to worry about the sustainability of government debt may feel increased anxiety given the wide variation in estimates of government liabilities.  In today’s comment we list some of the major reasons why figures differ and organize them in a common framework.

When reviewing debt figures it is important to distinguish between a) federal and state/local debt, b) gross vs. net debt, c) present vs. future obligations, d) on- vs. off-balance sheet commitments, and e) stronger vs. weaker commitments.  For those focused on the federal government’s near-term financial condition, federal net debt of about 50% of GDP (including net GSE liabilities) may be an appropriate measure; for those wishing to compare government debt sustainability across countries, gross general government debt to GDP of 70% is probably a fairer comparison. Unfunded liabilities of 200%+ of GDP are extremely worrisome, but serve mainly to make plain that fiscal policy must and will change.

As many economies and markets recover from the worst of the financial crisis, investors have turned their attention to the creditworthiness of governments.  The fiscal


continue reading





Google Spars with Ten Governments Over Privacy

Courtesy of Static Chaos

It all started with a letter earlier this month from the data protection authorities of ten countries demanding the company improve user privacy, citing concerns about Google Buzz and Street View services.

The letter was signed by officials in Canada, France, Germany, Ireland, Israel, Italy, the Netherlands, New Zealand, Spain and the United Kingdom.

Google’s initial response, as reported by Bloomberg,

We try very hard to be upfront about the data we collect, and how we use it. Of course we do not get everything 100 percent right – that is why we acted so quickly on [Google] Buzz.

However, Google took a testier turn when talking to the Wall Street Journal,

We have discussed all these issues publicly many times before and have nothing to add to the letter.

European authorities have long been among the Internet giant’s harshest critics when it comes to privacy issues. The company has negotiated with the European Union about the Street View mapping service, agreeing to limit to one year the storage of photos from the day images are published on the site.

Criticism is the U.S has been building too. A group of lawmakers recently asked the Federal Trade Commission to investigate Buzz, which they contend exposed private information about Google users. Google is also being sued in a California federal court over allegations the Buzz service violated privacy rights.

Google recently unveiled a “transparency tool” that gives information about requests it receives for user data or content removal from government agencies. The company is initially using data from July to December of last year. David Drummond, Google’s chief legal officer, said in a blog post,

We believe that greater transparency will lead to less censorship.

The elephant in the room – as much as the United States government prides itself on privacy and censorship, it is conspicuously missing from the signatories of the letter.

This coupled with the latest and more defiant tone from Google regarding its privacy policies, one could not help wonder if the allegation is entirely base-less that Google’s China fiasco was nothing more than a political quid pro quo for the regulatory heat Google’s been under.





Taibbi: Will Goldman Sachs Prove Greed Is God?

Taibbi: Will Goldman Sachs Prove Greed Is God?

Gordon GeckoCourtesy of John Lounsbury

Matt Taibbi has a feature article in The Guardian which parodies the Gordon Gecko "Greed is good" statement from the film "Wall Street". He carries the subject forward to develop a picture of Ayn Rand Objectivism taking over the world.

This is an article that will make some readers scream in disgust at the position Matt espouses and others scream in disgust at the Randian world he rants against. He concludes the article:

This debate is going to be crystallised in the Goldman case. Much of America is going to reflexively insist that Goldman’s only crime was being smarter and better at making money than IKB and ABN-Amro, and that the intrusive, meddling government (in the American narrative, always the bad guy!) should get off Goldman’s Armani-clad back. Another side is going to argue that Goldman winning this case would be a rebuke to the whole idea of civilisation – which, after all, is really just a collective decision by all of us not to screw each other over even when we can. It’s an important moment in the history of modern global capitalism: whether or not to move forward into a world of greed without limits.

Taibbi’s conclusion is similar to my repeated belief that it is important for the SEC vs. Goldman Sachs case to go to trial so the convoluted financial processes involved can be presented and reviewed by both plaintiff and defendant. The nature of the machinations must be understood by the masses and the limits of current law must be defined in order to have a rational debate. We need a complete expose so we can make logical decisions about where the financial system should go from here.

ayn randAbsent the trial or some other process of discovery we risk being doomed to divide into three camps:

  1. The Randians’ anything goes credo.
  2. Those who want to regulate everything to death.
  3. The vast majority who abandon hope of ever understanding enough to have an opinion.

We need a citizenry that understands what has happened to a sufficient extent to support some rational middle ground between the law of the jungle and all animals in zoo cages. 

Photo: Via Dangerous Minds 

 


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A Detailed Look At Goldman's Mortgage Trading Strategy In Late 2006 And 2007; The Goldman "Directive"

Courtesy of Tyler Durden

One of the key topics over the next week will be just what was Goldman’s exposure to the mortgage industry in 2006 and 2007, and was the firm actively short mortgage exposure or was it merely, as it claims, just a market maker without any active positions on its prop desk. Courtesy of Carl Levin’s recently declassified Goldman emails and presentations we get an extensive glimpse into Goldman’s net exposure, its DV01, its counterparties, as well as how the firm was planning on interfering with the market when it needed liquidity to offload legacy positions. We also get a rare glimpse into the contributions from Tourre’s mentor, Jonathan Egol. Let’s dig in.

The first question of whether the firm was short mortgages is answered clearly and definitely by the following table included in its September 17, 2007 presentation to the Goldman Sachs Board of Directors, updating the firm on its Residential Mortgage Business. The table is particularly useful because it provides a snapshot of the firm’s risk exposure to mortgages on November 11, 2006, long before Abacus was conceived. It also shows the firm’s bias on the mortgage crisis from a prop trading perspective.

The implications of the data in the table above are obvious, but first, here is the commentary associated with the DV01, with a focus on Goldman’s VaR change between Q4 2006 and Q1 2007.

Daily Mortgage VaR increased from $13 mm to $85 mm between 11/24/06 and 2/23/08 largely driven by an increase in SPG [Structured Products Group] Trading desk. The risk increase in SPG Trading desk was primarily driven by a combination of increased volatility in ABX market and the desk increasing their net short in RMBS subprime sector.

Translation: the firm’s SPG prop trading desk (no, not its client facing flow exposure, its prop operations) which likely held the bulk of prop capital around the end of 2006 and beginning of 2007, was already net short, and only got net shorter in the three months from November 2006 (before Abacus) into February 2007 (around the time Abacus was being marketed and the term sheet was being concluded).

As the first table indicates, Goldman Sachs’ associated DV01 with mortgage exposure was net short by just over $1 million per basis point change, that number nearly tripled…
continue reading





A Detailed Look At Goldman’s Mortgage Trading Strategy In Late 2006 And 2007; The Goldman “Directive”

Courtesy of Tyler Durden

One of the key topics over the next week will be just what was Goldman’s exposure to the mortgage industry in 2006 and 2007, and was the firm actively short mortgage exposure or was it merely, as it claims, just a market maker without any active positions on its prop desk. Courtesy of Carl Levin’s recently declassified Goldman emails and presentations we get an extensive glimpse into Goldman’s net exposure, its DV01, its counterparties, as well as how the firm was planning on interfering with the market when it needed liquidity to offload legacy positions. We also get a rare glimpse into the contributions from Tourre’s mentor, Jonathan Egol. Let’s dig in.

The first question of whether the firm was short mortgages is answered clearly and definitely by the following table included in its September 17, 2007 presentation to the Goldman Sachs Board of Directors, updating the firm on its Residential Mortgage Business. The table is particularly useful because it provides a snapshot of the firm’s risk exposure to mortgages on November 11, 2006, long before Abacus was conceived. It also shows the firm’s bias on the mortgage crisis from a prop trading perspective.

The implications of the data in the table above are obvious, but first, here is the commentary associated with the DV01, with a focus on Goldman’s VaR change between Q4 2006 and Q1 2007.

Daily Mortgage VaR increased from $13 mm to $85 mm between 11/24/06 and 2/23/08 largely driven by an increase in SPG [Structured Products Group] Trading desk. The risk increase in SPG Trading desk was primarily driven by a combination of increased volatility in ABX market and the desk increasing their net short in RMBS subprime sector.

Translation: the firm’s SPG prop trading desk (no, not its client facing flow exposure, its prop operations) which likely held the bulk of prop capital around the end of 2006 and beginning of 2007, was already net short, and only got net shorter in the three months from November 2006 (before Abacus) into February 2007 (around the time Abacus was being marketed and the term sheet was being concluded).

As the first table indicates, Goldman Sachs’ associated DV01 with mortgage exposure was net short by just over $1 million per basis point change, that number nearly tripled…
continue reading





 
 
 

Zero Hedge

Enemy Of The People?

Courtesy of ZeroHedge. View original post here.

Via The Zman blog,

There has never been a time when normal people did not know the media was biased and biased in a predictable direction. For every non-liberal in the media, there were at least ten liberals. The ratio was probably higher, but then, as now, some lefties liked to pretend they were independents or some third option.

The media used to invest a lot of time denying they had a bias and an agenda, but the only people who believed them were on the Left, which had the odd effect of confirming they had a bias and an agenda.

...



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Phil's Favorites

A 2019 Earnings Recession?

 

A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize ...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Kimble Charting Solutions

Gold & Silver Testing Important Breakout Levels!

Courtesy of Chris Kimble.

Gold and Silver from a long-term perspective have created a series of lower highs over the past 8-years. Will 2019 bring a change to this trend? A big test is in play!

Gold since the lows in 2016 has created a series of higher lows, while Silver may have created a double bottom.

Gold & Silver are currently facing break attempts a (1) and (2). These falling resistance lines have disappointed metals bulls for the past few years.

The direction of Gold and Silver weeks and months from now should be highly influenced by what each does as they are attempting to break above important resistance levels.

To become a member of Kimbl...



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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

http://www.insidercow.com/ more from Insider

Digital Currencies

Russia Prepares To Buy Up To $10 Billion In Bitcoin To Evade US Sanctions

Courtesy of Zero Hedge

While the market has been increasingly focused on the rising headwinds in the global economy in general, and China's economic slowdown in particular, while the media is obsessing over daily revelations that Trump may or may not have colluded with Russia to get elected, a far more critical, if underreported, shift has been taking place over the past year.

As we reported in June, whether due to concerns over draconian western sanctions and asset confiscations following the poisoning of former Russian military officer Sergei Skripal, or simply because it wanted to diversify away from the dollar, Russia liquidated virtually all of its Treasury holdings in the late spri...



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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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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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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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