Archive for 2011

Another Nail In The Dollar’s Coffin: CME Launching Renminbi Futures On August 22

Courtesy of Tyler Durden

Remember when the dollar reigned supreme, and nobody cared about that joke of a currency, the Chinese Renminbi? Neither do we. And neither does the CME, which just announced it is launching USD/CNY futures, which will be available in standard and E-micro sizes beginning August 22. Put otherwise, with one fell swoop the CME will now allow one to transform liability risk, credit and maturity of underlying assets from one currency to another, while on margin (granted, exposed to the same margin shenanigans that make silver bulls scream blood murder every time the CME’s name is mentioned). And the CME is just the beginning of what soon will allow everyone to denominate their liability exposure into the Chinese currency. In the process, the dollar lost yet another battle, as it continues to lose the war.

From the CME:

The Chinese renminbi – or RMB – has experienced rapid growth in deposit and trading volume both on- and off-shore. The renminbi is now being used for business transactions in multiple off-shore locations which include Hong Kong, Singapore, Korea, Australia and other areas around the world. Accordingly, a need for capital risk management tools for the Chinese currency has emerged.

To address this need, CME Group has developed USD/RMB futures. These contracts will be offered in standard and E-micro sizes and will be quoted in conventional interbank FX market terms.

    Standard contracts: Based on USD 100,000
    E-micro contracts: 1/10 the standard contract size, based on USD 10,000

Key features:

  •     Cash-settled to the spot value of the interbank convention, RMB per USD, as published by the People’s Bank of China (PBC)
  •     Daily pays and collects calculated in RMB, then translated into USDs
  •     Renminbi rate is displayed on Reuters SAEC page
  •     Available alongside the CME’s existing RMB/USD contract quoted in the American convention

Full contract details:

Contract Specifications: Standard and E-micro USD/RMB Futures**
Contract Size Standard Futures based on 100,000 USD (≈ RMB 648,300);
E-micro Futures
based on 10,000 USD (≈ RMB 64,830)
Tick Size Standard Contract: Outrights quoted in 0.0010 RMB per USD = 100 RMB (≈ USD $15.42) per contract; calendar spreads quoted in 0.0005 RMB


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Guest Post: Peace In Our Time

Courtesy of Tyler Durden

Submitted by Miles Kendig

Peace In Our Time

“History doesn’t repeat itself – at best it sometimes rhymes.” Mark Twain

The Rhyme This Time

In 1938 the citizens of the major European powers, Germany, France and the UK, along with isolationist America, having suffered grievously during WW1 were willing to believe almost any lie that supported the prevailing sentiment.  Sentiment exemplified by the aforementioned timeless speech from Neville Chamberlain.  Today I see a European political and economic elite clinging desperately to the notion that any action that calls into question the current construct of pan-European “unity” must be quashed to preserve the peace.  The reality from the available evidence suggests that what these elites are more fearful of is broad realization that this current construct is as fatally flawed as the one in existence in 1938.  

The flaws today are rooted in in several key premises and include:

  • The foundation that all Euro area sovereign debt is equal in risk
  • That the nations within the EU and more importantly within the EMU share a common goal of preserving the structure through accurate & timely reporting of national fiscal policies and actions
  • That no member state will be called upon to fiscally support another member state
  • That the common goals implicit and explicit of those nations within the structure will always endeavor to maintain their close relationship to ensure a smooth functioning and strong perpetuation of the structure

Today these premises seem as tragically laughable as those that underpinned European stability and peace in 1938.  All one need to is look at the daily chart of where member states sovereign debt is trading in relation to one another or the like flows in the bank paper of the various member states to realize that all sovereign and money center debt is not created or considered equal.  In this it has now become generally accepted that member states and their financial institutions will do ANYTHING to preserve the illusion of adherence to reporting standards while doing EVERYTHING within their power to circumvent them.  In this every member state has an explicit need to perpetuate this unhappy set of circumstances.  Circumstances that directly undermine the whole concept of relationship be it between individuals, firms, institutions and nations.  These and their supporting cast of permeations are proving to be as durable…
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Weekend Reading – Hang in there Baby!

I have to tell you some terrible things.  

I didn’t want to do it – I almost didn’t bother with this post as it’s soooooo depressing and who wants to hear that crap but there’s also a lot of stuff going on and it’s my job to inform you of it so I’m HOPING (because I am a hopeful guy) that, if we get it out of the way now, we can start the new week in a better mood.  So, I’ve decided to post up some of the news stories I’ve been reading but intersperse then with encouraging pictures to take the edge off a little:  

First, a couple of items about jobs.  It seems that the aggregate hours worked in U.S. economy from all workers moves back to February 1999 levels. 25 million Americans out of work or looking for full-time work as middle class continues to shrink.  RortyBomb points out: "This is part of what people mean when they say there’s unused capacity, and that’s a tremendous waste of people’s talents and lives."  An unemployed person detracts from the wealth of the nation and anyone in Congress who doesn’t believe that does not value the American workers and should not BE valued by them in November!  Equally awful:  At this point, only 45 percent of Americans now have health insurance through their employers. Equally startling is the 16.6 percent (52M) that have no insurance at all. The employment figures are one facet of the larger storyline of a shrinking middle class.

Meanwhile, as our Congresspeople tell us we can’t afford $1Bn for this and that program that benefits the American people, Brown University’s Eisenhower Research Project just released a study that shows 225,000 people killed in the Iraq-Afghanistan wars, 137,000 of whom were civilians with 7.8M people turned into refugees – about the entire population of Connecticut and Kentucky combined forced to flee their homes and about 20% of population of the countries we invaded.  They US has spent about $4,000,000,000,000 on the war (so far), which was enough money to give 8M people $500,000 each rather than blowing up their homes.  That’s OK though, there are 110M taxpayers in America so we only borrowed $36,363.63 each to pay for it (so far).  

According to the Institute:  "The human and economic costs of these wars will continue for decades, some
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Staring Down China’s Inflation Dragon

Courtesy of www.econmatters.com.

By EconMatters

Concern about the European sovereign debt crisis has moved from Greece, to Portugal when Moody’s downgraded the country to junk status last week. Now Italy has become the new victim as worries of a debt crisis contagion, as Italy, euro zone’s third largest economy, is the next weak link in the region (See Chart).

The Wall Street Journal reported that default insurance costs for Italy, Portugal, Ireland and Greece have all hit record highs Monday, July 11.  The crisis only got worse Tue. July 12, when Ireland also got axed to junk by Moody’s.     


Source: New York Times

According to NYT, the interest on Italy’s 10-year bond spiked to a record 5.67%. While that is still far below what Greece is paying nowadays, analysts say Italy will have serious problems if its borrowing costs exceed 6%.

If markets were worried about banks’ exposure to Greece, check out these numbers cited by NYT:

“European banks have total claims and potential exposures of 998.7 billion euros to Italy, more than six times the 162.4 billion euro exposure they have to Greece, according to Barclays Capital. European banks have 774 billion euros of exposure to Spain and 534 billion euros of exposure to Ireland.


In the United States, banks are also more exposed to Italy than to any other euro zone country, to the tune of 269 billion euros, according to Barclays. American banks’ next biggest exposure is to Spain, with total claims estimated at 179 billion euros.”

In addition to a debt load of 120% of its GDP--the second highest in Europe--Italy’s predicament could also be partly attributed to the political power struggle between Prime Minister Silvio Berlusconi and his finance minister, Giulio Tremonti, as the political dispute is threatening the country’s austerity and debt management efforts.

If the Italian sings a good political opera, the United States gets an Emmy for its political soap.

Deadline is fastly approaching for the United States.  If the Congress fails to reach a deal in 10 days in order to meet the Aug. 2 deadline to lift the nation’s debt ceiling, the U.S. could face probably…
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Obama To Address Nation At 11:00 AM, Announcing Lack Of Agreement On Debt Ceiling, Or T Minus 10 Working Days Until T-Day

Courtesy of Tyler Durden

After meeting for exactly 90 minutes, the president and members of congress achieved absolutely nothing except for what ZH readers already knew: that a debt deal has to be reached by July 22 or else. “President Barack Obama said Sunday that “we need to” work out a debt deal within the next 10 days as he convened a meeting with congressional leaders, aiming to fashion a deficit reduction package for the next 10 years. As the meeting opened, Obama and the leaders sat around the table in Sunday casual dress. Asked whether the White House and Congress could “work it out in 10 days,” Obama replied, “We need to.” Despite Boehner’s preference for a smaller, $2 trillion plan for deficit reduction, White House aides said Sunday that Obama would press the lawmakers to accept the larger deal. Republicans object to its substantial tax increases and Democrats dislike its cuts to programs for seniors and the poor. The aides, however, left room for negotiations on a more modest approach.” And just like on Friday when the president’s appearance was heralded as a harbinger of a massive NFP beat only to be the biggest let down since Geithner’s TV appearances in February which sent the market down by 10 S&P points each time, so the president will address the nation tomorrow. From Reuters: “U.S. President Barack Obama will hold a news conference at 11 a.m. EDT (1500 GMT) on Monday about the status of negotiations to cut the deficit and raise the debt ceiling, the White House said on Sunday. Obama met with congressional leaders for about 75 minutes Sunday evening and will meet again with them on Monday “to discuss the ongoing efforts to find a balanced approach to deficit reduction,” the White House said, without giving a time for that session.”

More from the AP:

“He’s not someone to walk away from a tough fight,” White House chief of staff William Daley said. “Everyone agrees that a number around $4 trillion is the number that will … make a serious dent in our deficit.” But embedded among the tough words was rhetoric that acknowledged the “big deal’s” prospects had become uncertain at best.

“We’re going to try to get the biggest deal possible,” said Treasury Secretary Timothy Geithner.

It was an abrupt change from 24


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Bull Market or Blow Off Top for Stocks and ETFs?

Courtesy of John Nyaradi

Bull Market or Blow Off Top for Stocks and ETFs?

Recent stock market action has been remarkable, to say the least, confounding bulls and bears alike.  The former say it’s a new leg higher while the latter say the end of the world is nigh.

Can the stock market and ETFs go higher or is this a blow off top like so many others that have preceded significant declines?

Our view is that both the fundamental and technical picture point to significant downside risk for investors ahead.

On My Wall Street Radar

Below are two charts of the S&P 500 (SPY) with varying views and time frames.

Chart courtesy of www.stockcharts.com

The above chart is a year to date view comparing three strong advances that were followed by significant downturns and you can also see how the 50 Day Moving Average has curled over from its previous upward trend.

Chart courtesy of www.stockcharts.com

This chart goes back to the March, 2009, lows and shows the uptrend that was just recently broken and how the index fighting to reclaim and hold that level.  A sustained close below this trend line will be particularly bearish for the major markets as that will become new resistance while a climb from here would, of course, be bullish.

Also, in the first chart you’ll notice that the recent rally had a number of gap opens, and gaps like these typically get filled in subsequent days which would indicate the likelihood of lower prices ahead.

To further complicate the picture, volume remains light and insider selling remains heavy.

For another view of today’s patterns, my friend, Jeffrey Hirsch of Stock Trader’s Almanac, introduces an interesting discussion of a forming head and shoulders pattern and Three Peaks and a Domed House Pattern in his article, “Right Shoulder Arms!”

The Economic View From 35,000 Feet

The economic news continues, frankly, to be nothing less than shocking.  So much is happening and so much has been written about all of this that perhaps it’s best to take a look at a few of these bullet points with relevant commentary attached:

  • June Non Farm Payrolls report says U.S. added 18,000 jobs compared to 125,000 expected: a truly shocking number from any perspective.
  • Wages declined: another headwind for the


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Maturity Of Average Outstanding Treasury Debt Jumps To 8 Year High

Courtesy of Tyler Durden

Something curious happened with outstanding Treasury debt over the past few years: after plunging in average maturity to just 49 months during the Lehman crisis, when everyone scrambled to safety of Bills and the Treasury was forced to issue gobs of it, since then average maturity has been a one way street, and as of the end of Q1 as per the most recent quarterly refunding statement, is at 60 months. This is the “oldest” average Treasury age since 2003, and a substantial shift from the recent average of about 55 months. Incidentally, 60 months is what Stone McCarthy calculates is the average maturity of Fed SOMA holdings (as in debt purchased as part of the various QE programs). Keep in mind this chart is as of March 31: in the past three months due to the debt ceiling breach, Geithner has aggressively reduced Bill rollovers, which means the average Treasury age is likely about 65 months if not more. And while we have discussed the imminent surge of Bill issuance as soon as the debt ceiling is raised, this will be nowhere near enough to get the Treasury comfortable with average bond aging. Since Geithner will certainly do all in his power to reduce the average duration on marketable bonds to recent historic lows, the only way we can think of this happening on a “voluntary” basis is for a recreation of the same Lehman conditions that forced a 6 month change in maturity in the span of 60 days back in October 2008.

Parellel with this, we see the average maturity of Fed Treasury hodlings:

Another chart probably just as important, shows something far more important, and something we also discussed recently in “T-Minus Two Months Until The $500 Billion Rolling Debt Ticking Timebomb Goes Off” when we observed the massive amount of Bills maturing and needing to be rolled over in under two months. As can be seen on the chart below, the bulk of monthly issuance each and every month is primarily Bill focused. When the next quarterly refunding statement details the Q2 issuance we are confident that Bill issuance will plunge to historic lows on a relative basis. Which, once again, argues that the Treasury will do all in its power to not only create the Bill supply (that comes natural to them), but make…
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Maturity Of Average Outstanding Treasury Jumps To 8 Year High

Courtesy of Tyler Durden

Something curious happened with outstanding Treasury debt over the past few years: after plunging in average maturity to just 49 months during the Lehman crisis, when everyone scrambled to safety of Bills and the Treasury was forced to issue gobs of it, since then average maturity has been a one way street, and as of the end of Q1 as per the most recent quarterly refunding statement, is at 60 months. This is the “oldest” average Treasury age since 2003, and a substantial shift from the recent average of about 55 months. Incidentally, 60 months is what Stone McCarthy calculates is the average maturity of Fed SOMA holdings (as in debt purchased as part of the various QE programs). Keep in mind this chart is as of March 31: in the past three months due to the debt ceiling breach, Geithner has aggressively reduced Bill rollovers, which means the average Treasury age is likely about 65 months if not more. And while we have discussed the imminent surge of Bill issuance as soon as the debt ceiling is raised, this will be nowhere near enough to get the Treasury comfortable with average bond aging. Since Geithner will certainly do all in his power to reduce the average duration on marketable bonds to recent historic lows, the only way we can think of this happening on a “voluntary” basis is for a recreation of the same Lehman conditions that forced a 6 month change in maturity in the span of 60 days back in October 2008.

Parellel with this, we see the average maturity of Fed Treasury hodlings:

Another chart probably just as important, shows something far more important, and something we also discussed recently in “T-Minus Two Months Until The $500 Billion Rolling Debt Ticking Timebomb Goes Off” when we observed the massive amount of Bills maturing and needing to be rolled over in under two months. As can be seen on the chart below, the bulk of monthly issuance each and every month is primarily Bill focused. When the next quarterly refunding statement details the Q2 issuance we are confident that Bill issuance will plunge to historic lows on a relative basis. Which, once again, argues that the Treasury will do all in its power to not only create the Bill supply (that comes natural to them), but make…
continue reading





Recovery Charts-expect a tough and volatile autumn

Courtesy of thetrader

By www.thetrader.se

Some self explanatory charts of the great recovery and some possible hick ups in Greece.

                   

             

Charts John Mauldin

and don’t forget the Joker





Guest Post: The Financial System Is Built On Eggshells: Can Spain Avoid Default On Its Own?

Courtesy of Tyler Durden

From JM

The Financial System is Built on Eggshells:  Can Spain Avoid Default On Its Own?

The European financial system, like the others, is efficient but is not robust.  It makes the most of what it has and runs on a razor edge between efficiency gains for individual agents and horrendous systemic losses.  It depends crucially on the performance of its sovereign assets.  System survival depends on one hand whether or not counterparties can absorb the necessary haircuts and on the other, whether fundamentals of debtor nations are strong enough to stand on their own.  

Spain and Italy will have to stand on their own, because when Greece goes, Ireland will most likely go, which will in turn set off a critical mass such that the nation who dictates monetary policy (Germany) will be taking care of its own self. 

Data on Servicing

 
 
 

Zero Hedge

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.

...



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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...



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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?

 

Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?

...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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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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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

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 chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 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:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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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