Crazy George’s Playbook

With the futures down about 45 points, after closing up 76 Dow points on Thursday, I’m just sure that our colleague in doom will be placing trades this morning on this last day before Schmita (Sunday, Elul 29) on the short side.

You see, that is when the market is supposed to hit the fan.

The way I figure it, the TRUE believers in such pap would be buying short positions by the bushel basket this morning.  IF Schmita were a useful/tradable indicator, how else could they play it?

No, I doubt they will lay on the Big Catastrophe Shorts because we won’t know until after the Fed announcement Wednesday afternoon how the market will really react.

Of course IF the Fed decision in not “in bounds” they will claim a victory.  Or, if we really just go down Monday/Tuesday otherwise predictable turning points, they will say the “Schmita has inverted this year.”  Vape-o-nomics.

However, if they are not fully invested in the downside by the close of business today, I have have to remind you of the dictionary definition of the word charlatan:

“…a person falsely claiming to have a special knowledge or skill; a fraud.”

As Peoplenomics readers will attest, our Trading Model has been short every week except one since the week ending July 3, and the other week was neutral/cash.  Our model is still on the short side.

And we would not expect the market to spin on a dime here.

In my view the current period is likely to continue down to as low as 1,740, but like 2008 (when the Peoplenomics Model turned short 12-weeks in advance of Schmita which missed 22% of the decline) I would expect the same kind of thing this time.  Since 2008-2009 was 41-weeks short on the model, and since we are only 11 weeks into this decline, could we go lower?  Sure.

As I have said going into this morning, if the Schmita prompters really believe, they would go all in on the short side today.

In our Model, we will simply remain short and wait for a possible Monday/Tuesday decline as the market waits for the Fed decision Wednesday of next week.

Sadly, the Fed has a real problem – and now we get to the serious part:

If the Fed doesn’t raise rates, people will think “Oh my God…things are SO BAD the Fed can’t raise rates.  I should be short!”

On the other hand, if the Fed raises 10-25 basis points, I think people might panic the other way.

Robin Landry an d I were talking about this at dinner last night..  Robin calls it the “Glass half full” problem.

His point being that it’s very hard to tell when optimism (half full) hits a tipping point and becomes pessimism with the glass “half empty.”

What would I personally like to see?

In the equivalent period in 1928, the Fed raised 25 basis points.  But the prevailing discount rate was at 3 1/2 percent.

When the rate is down 2%, or whatever, there is a strong case that a very firm “hand on the tiller” would be for the Fed to do something shocking:  Like a 10 basis point raise.

I have never seen anything mandating even quart point/25 bips raises.  And psychologically it would be the best move in history.

To the Bears in the “Oh my God they can’t raise” camp, it would say “Sure we can.”

To the Bulls in the quarter to half raise camp it would say “We are independent minded”.

Around here, we will remain as we have for 11 weeks in the cash or short position.  I like cash.

And we pragmatically await the outcome of next week since the data will make the decisions for us.

A reminder for the two couples with us on this cruise (Peoplenomics readers), we will meet in the Windjammer Bar area at 2 PM (ship’s time/Central) and watch the market close and you can see the the Trading Model before we put it out for subscribers on Saturday morning.

Robin should be there, too…so Aggregate and his Gann-Elliott trading work.  That as a 3 PM toast to the market close.

Crazy Guess?  Modest decline today, further decline Monday, spike low Tuesday and stabilizing until Fed data.  Support levels on the S&P:  About 1,860, around 1,820, and 1,.740.

After that…well, let’s just say the Wave 4 then Wave 5 rally into the election aftermath in 2016 would be off the table.  My work says no, that won’t happen.

I had a problem once handicapping the ponies though:  The horse didn’t “read the Racing Form.”

Markets like the ponies can get’cha sometimes.

Papering Over

We suspect the only reason the Federal Debt Ceiling hasn’t been busted is by refi’s and book switching.  The Federal Debt to the penny hasn’t really changes in months and months.

And this morning we read this with 6 ounces of suspicion:  Treasury’s Lew says US can still borrow through late October.  Yeah.

Producer Prices

Hot off the press release:

The Producer Price Index for final demand was unchanged in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today.

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Coping: Last Days At Sea

(Somewhere off Cuba)   We will arrive back in Galveston Sunday morning – early.  From there it’s only 4-hours up to the woods and getting back to the normal order of things.

A word, or two, about commercialism of ports when you go cruising, is in order.

A look at Falmouth ,  Jamaica – on the left as seen from our balcony – would lead you to believe that it’s a beautiful place.

But not so fast, my friend.

Yes, it’s true that it is a gorgeous place, and all.  But ONLY inside the wrought iron fences that surround the port district and on the escorted tours.

As to wandering around the “old town” part of Falmouth, we were advised, both on the ship and by ground security personnel that wouldn’t be recommended.  And that’s for a party or four.

A couple of things here:  One:  Jamaica has strict gun control.  So a lesson may be learned there. The biggest problems would  likely have been lots of “in your face” street vendors and outright begging and so forth.  Crimes against persons, as in assaults and such, are low.  Still, it takes some of the buzz off the place.

You can find the Jamaican Firearms Act online here, but the long and short of it is that while it is a deterrent to the some of the newbies, the drug gangs still have them.

This will almost certainly get us into a long discussion about “How much worse things would be without gun laws…”  But, since the two conditions (armed/disarmed) cannot exist in the same place, all we can do is again note that places where there are gun laws  (Syria’s president Assad is big on gun control for State Security which in turn uses official guns to intimidate, harass, and steal outright from the civilians.…) things are usually far from peaceful.  Or, at the other extreme, you get a totalitarian State, so choose wisely.  As our Founders did.

The second thing that happens in Falmouth is that commercialization takes place.  We had a cold one at Margaritaville (yes, the one with the souvenir mugs).  That’s a familiar brand in the US, so it’s kind of interesting to travel 2500 miles (round trip)  on a ship and still have the familiar brands about..

On the other hand, we had the obligatory Tasties patty at the Port and it had only about half the meat/filling which I remember from the 1980’s.  Back then, the rule of thumb was a good patty should have equal amounts of meat (like a 1/2 inch) and that should be more than the combined thickness of the two halves of the pastry.

If you’ve never had one, think of the 7-11/QwikiMart Apple Pie/turnover as a form factor.  Now, take out all the filling and sugar and stuff a Caribbeanized version of taco filling in it and deep fry.

On the other hand, got no complaint about the price:  Just $3 bucks for chicken or beef, or the combo.  Stark contrast to the $24.95 large frozen margarita. Any nutritionist would pick the patties as best price/nutrient.

Other than Elaine posing on the (not real) treasure chest outside with the Landry’s looking on, Mr.

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Useless if Not Timely

This leaves us only three trading days to go before we find out how that other nonsense turns out. A reader did ask a pertinent question, though. What is the difference between people considering Schmittah and you using long wave economics?

Coping: Duty-Free Economics

So this morning we will stick with the tourism stuff. We arrived in Caymanian waters Wednesday about 10 AM and dropped the hook at 10:30.

Schmita and a Lesson in Backtesting

(Somewhere off Cuba)  This morning’s report is truncated.  That’s because we are doing exactly what our Model had been saying.

In short, we are now in a buying wave that will either end today or tomorrow,  and we should finish next week with a good….

Wait!

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Coping: The Woo-Woo Returns, More Cruising Notes

(Cozumel, Mexico) While the market is looking like it will be coming up green (instead of the world ending today) we have time – as expected – to focus on the relaxing parts of life.

To begin with, a reader note about a recent woo-woo experience is worth part-time pondering:

What a strange week this has been.. the first thing that happened was my wife setting her phone on the kitchen counter.. everyone seen it..

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Markets Closed, Government Inequality

Except that in Europe, things are up between a third and half a percent. However in Asia, the markets are jittery as ever. The Hang Seng was hang-dog, down one and a quarter percent.

Coping: A Couple of Cruising Notes

(Wherever, Off Mexico) – A shopping mall with cartoon characters for the kids?  Inside the middle of a ship more than a thousand feet long with its own Starbucks hustle in the middle?

Uh-huh…this is cruising on a mega cruise ship.

Our ride down from the ranch to Houston Saturday morning was uneventful.  We stayed in a modest hotel in The Woodlands, ate incredibly healthy, and got more sleep than the folks we were traveling with.

The Landry’s had a wedding to attended, so Elaine and I took the opportunity to roll 12-hours of ZZZ’s.

Boarding the ship Sunday in Galveston was a tad of the frustrating side.

The way the Port of Galveston is set up, they have two parking areas that are several blocks from the actual cruise ship and shuttle busses are used.

Here’s the problem:  Absolutely zero coordination between the lot attendants and the shuttle drivers.  “Go stand by the fence,” one told us.  But that was with a half-empty bus much closer and going to the same two ships.

The first shuttle by the fence drove right by, and while Elaine and the Landry’s were wandering around after being told “Wait by your vehicle,”  Ures truly finally found a bus with an intelligent driver and after a good bit of cross-parking lot bellowing, and did I mention $10 bucks? – we got my bus underway and picked up the three Musketeers.

You need to understand a few things about the Galveston dock:  It’s like a cattle chute system, unless you’re traveling with people who have been on a lot more “points”.  Since Robin is “Emerald” we managed all the “special lines” which cut waiting time a lot.

However, since boarding was delayed a better part of an hour, that meant things were getting hot, people grouchy, and a dozen people wanted to cut in line, since ours was moving faster.

The slow part, just as at airports, was the security check points.  The number of wheel chairs, stroke walkers, and artificial hips, knees, and so forth, was prodigious.  They don’t really need security guards so much as a trauma or triage doc for this thing.

Eventually we boarded and Robin scored a table for four on the shady side of the ship on the 11th floor because rooms were not quite ready yet. 

A good thing, as it turned out, since it gave us plenty of time to study the drink packages and we took care of that little detail.

The rest of the day was spent getting to know the place, which we did.  And in a few minutes the breakfast buffet will be opening and all hell will break loose as 3,500 people need to eat.

So far, the general impression is good, provided you can travel with a couple that has plenty of points in already.  We are “gold” but that doesn’t get you past the general herd at boarding.

Given a preference in the future, Elaine and I are leaning toward smaller ships (Norwegian Jewel size, or 2,500 passengers).

We did chat with one of the more odd coincidences.  We happened to sit for a few minutes with a nice young couple (half our age, if that) who were on the cruise for the first time.

He happened to be recently out of the Air Force and his first name was Brandon.  During three adventures in the sandbox, he was an Air Policeman.

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Two Weeks to Rally?

Since our Trading Model started to flash “Everyone out of the pool!” back on July 3, when the S&P was up at 2,076.78, we’ve been waiting to see whether a couple of key support levels would hold.

Decline Day: Or, Shooting Fish in the Barrel; S&P 1,820 Next

God, I love it when between Landry, my consigliore and me we can look so accurately into the future…

Maybe it takes a little bit of the fun out of life, if you’re a stress addict.

I mean that works until you’re 40-something.  But at some point your doctor will whisper something in your ear about blood pressure and life will change.

The double shot Americano talls will become single shot decaf Americanos.  You will turn down your ringer on the phone.  Music volume fades to under 85 db, loud clubs and dangerous situation change.

My son’s favorite phrase when in stress is still “We can talk this out or shoot it out…makes no difference to me…”

But as you age, you learn to look people in the eye and say “My lawyer is meaner than your lawyer” and that relieves a lot of stress.

Which gets us to markets and your retirement.

If we hold at S&P 1,812 or above (choice #1) or 1,740 (choice #2) then we should see a screaming rally after the Fed Meeting.

If we collapse past that, then we’ll all be eating Alpo.  That’s why we have been telling you for the past couple of weeks:  Rally before the holiday (check!_) but fade Friday because people who pumped will dump and you don’t want to be the dumpee unless you’re short, in which case Thursday’s highs was where that party was for the Sept puts.

Since the market is closed Monday and we will be partying on a cruise ship, pardon me while we kick it and wait for the washout low either the 10-11th or the 14-15th and that one should be 1,812 low max or 1,740, but we shall see.

In the meantime, there are more BS date-pickers around the net than you can shake a stick at which gets me to wondering do you think some shadow government or terrorist group is double dumb? 

I mean a) no one will be watching the tube, which is why Labor Day is safe.  And b) they sure as shit aren’t going to put a notice out on the internet because IPs can be tracked and what the hell do you think The Castle is all about?

(The Castle is that installation near Provo that has the moat around it. Not unlike The Fort  back in merry land.) 

Sheesh!  GMAFB.  “Go read Thomas Gilovich” is what I tell Schmita proponents.  His book,  How We Know What Isn’t So: The Fallibility of Human Reason in Everyday Life” explains in terms simple enough even I could follow along, how we are bred to use that gray matter thing to understand what’s coming to eat us.  We look for patterns.

Unfortunately, it  (Schimta)  was close in 2001, and 2008.  Two points does not a legit pattern make.  I don’t remember a market collapse in 1994, though yeah, a miss in 1987.  But 1980?  1973?  September is the worst month of the year anyway, so you could attribute anhything you want.

If people had any brains at all, they would figure out there is this thing called the National Day Calendar, too

Today (if you didn’t know) is National Wildlife Day, National Newspaper Carrier Day, National Macadamia Nut Day, National Lazy Mon’s Day, National Hug Your Boss Day, and National College Colors day.

If I wanted to get rich, I would come up with something closer to the middle of the month (*so I could claim “close” when the market declines like it does in September anyway).  I’m thinking the 13th is National Peanut Day and National Programmers Day because it’s the 256th day of this year, right?

So then I do some sermons, post them on YouTube, write a quick book and Kindle my way to retirement.

When that doesn’t work out this year, I retool for next year (selling sermons, books, and advertisements on a web site) because September 15th is Google Day or National Double Cheeseburger Day.

You see how this works? 

No one goes further back that 2001 because Schmita is a Jewish Lunar Calendar event and the collapse in 1987 was in October, not September.  But hey, don’t let me be the lone voice of reason.  I’m just the guy standing at the rain barrel shooting fish and looking for the panic moment before the Fed Meeting to go long.

The really amazing part of this kind of clarity of thought is people miss the really delicious jokes the Universe plays on us…the the upcoming one on September 16. 

THERE is a conspiracy for you:  The Fed Announcement on the 16th which happens to be (I shit you not)  “National Play-Doh Day.”

ROFLOL  Get it?  Play dough?  (I crack myself up with facts, sometimes.)

See how much fun we have here in the Total Reality Newsroom?  Anchor/Reverend George, presidin’.   Here, buy my doom book.

Now onto the Jobs Reports

Nope., no particular doom here, either.

Hot off the press release:

Total nonfarm payroll employment increased by 173,000 in August, and the unemployment rate edged down to 5.1 percent, the U.S. Bureau of Labor Statistics reported today.

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Coping: Life with the Amazon Echo

I promised a little more discussion of the Amazon Echo when I had some time – so this is that time.

Why is there a fork leaning on the Echo?

That’s to give you an idea about how big it is.  It’s a little taller than a large dinner fork and about 3-inches in diameter.  That wire coming out of its base is the power.

Used to be product pictures were taken with a dollar bill or a pack of ciggies, but since the Treasury isn’t happy with money pictures and since ciggies are out of favor, my scaling weapon of choice these days is a fork.

This is really a computer and internet voice-interface machine.

It is a wireless device:  You need to have a home (of office) wireless network to enable it.

Interface:  You talk to it, it talks to back.  Kind of like marriage.

Setup:  You log into the Echo through a control panel on the web.  The control panel is used for setup (like to link your iHeart Radio account to the Echo, so it can stream content.  

You also use the online control panel to print out your shopping and to-do lists.

What it is:  It’s a computer and online audio media tool.   Think of it as a cross between a kitchen time, shopping and to-do list manager,  and a kitchen radio – at least that’s the slot it fills in our toy box.

Command Words:  The standard “name” you address the device as (in other words, to tell it “I’m talking to you” is “Alexa

Functions:

The number of features will be growing over time.  Here at the ones we presently use:

    • Alexa:  Tell me a joke.   (she will)
    • Alexa:  What time is it?  (she tells)
    • Alexa: Tell me a joke  (“Why did the banker quit his job?  He lost interest.”
    • Alexa:  Tell me a joke (“What’s the difference between a well-dressed guy on a bicylce and a scruffy guy on a tricycle?  Attire!”)
    • …the jokes go on endlessly…
    • Alexa:  Set a time for Xx minutes.  (“x minute timer set).
    • When the timer goes off “Alexa, stop.”
    • Or, if you don’t like the timer you set and don’t want it to go off anymore:  “Alexa, cancel x minute timer…”
    • And, when you’re doing steaks on the grill outside “Alexa, time remaining”  “A bout xx seconds [or whatever the remaining time is]
    • The system supports multiple timers.  We aren’t that complicated most of the time, though.
    • The Echo will also also read Wikipedia entries.  “Alexa, wiki Civil War”  “The American Civil war was….blah blah blah…”  Basically, it reads the first Wikipedia paragraph and ends with “For the full article, look at the Alexa App “ (which is the online control panel)
    • “Alexa:  Prime Music Jazz:”
    • “Alexa:  iHeart Radio WBAP”  or whatever else is on iHeart Radio, and you can set up lots of account links from various sources.
    • There is a voice calculator, too:  “Alexa: what is 137 divided by 12?”  “137 divided by 12 is 11.4166666667”    For my back pocket approximation of Pi, “Alexa, what is 22 divided by 7?”  Her answer goes plenty of decimal places.
    • She does just the basic four, doesn’t know what imaginary numbers are (except as a Wikipedia paragraph) and don’t ask her for second derivatives or standard deviations.  Yet.

    The only things to keep in mind are it is an evolving art and just like using any speech program  it will take time to figure out what you’re saying, especially if your Engrish is tainted, accented, regionalized heavily and what-not.

    For radio it is “Alexa, [source] [item detail]”  *(like Prime Music is the source, then item detail is jazz playlist).  You’re talking to the replacement civilization and they’re not really understanding us, but then again, present human leaders don’t either.

    Since we live out in the outback, radio reception here sucks but since wed have plenty of bandwidth (which I am convinced is the “new personal wealth item” we find it a spendy but grand fun replacement for a kitchen radio, timer, voice driven Wiki thing, calculator, and it does fine at the shopping and to-do lists.

    The control panel is a bit stupid at the moment.

    I mean like the List editor.

    I could not find a “delete checked” at the top of the page so once something is on your list, it is there for Eternity unless you go in and use the control panel.

    Although it may seem simple enough to add a voice command like “Alexa, delete shopping list” and respond “You want me to delete your shopping list, is that right?”  (yes/no) that’s the kind of thing that they are still working on (presumably),

    I think I mentioned that since you have to know your network settings with the app, you should be able to specify a wireless printer so you could have things like “Alexa, print to-do list” which – along with delete function – would make it a very useful tool.

    It’s not there yet.

    But did we spring for one?  Yes.

    You can order one at this link:

    We also ordered the remote control (which includes a remote microphone instead of the 7-mic array built it.  So far, we haven’t used it.

    As I write the column this morning, I’m 22-feet from the machine in quiet home, so with a noise floor of –135 db, it works well at that range.

    It’s an interesting tool and why is it I have a funny feeling that Amazon is leveraging the development of this product to eventually roll a Siri like capability into a future Kindle product?

    Hell of a kitchen radio/timer/.paperwork laying around eliminator.  Now if they’d just implement my network printer default setup I suggested…

    I did swear at Alexa once (to test)  “That’s not very nice” was her answer.    Who?  Moi?.

    If you say :”Alexa, thank you” she will replay “You’re welcome.”  You don’t need to thank machines, at least not yet.

    Around the Ranch:  Computers out to Get Humans?

    Already? 

    Yeah…talking about being the first on our block (which is 12 miles to drive around, but that’s what rural life is about, right?) to start talking to our replacements….reminded me of this adventure.

    Panama’s significant is finishing up her degree with the local state universitrap.  T’other day, she did a long and involved business course – and test – and all the results disappeared.

    Worse, when she logged in, she was shown another student’s work and a different instructor.

    So she called to talk to the instructor:  Yes it was a problem caused by a duplicate account.

    So he promptly deleted THE WRONG ACCOUNT..

    After a couple of days of seething about it, more emails and messaging, she logged back in and all of her work has mysteriously reappeared, complete with her 3.7-something GPA.

    So all’s well that ends well, except I suggested the two of them consider asking for a student loan discount for the hassle-factor.  They’re not that kind of people.

    I am.

    Friday Life Overload

    With guests due to arrive at about 4 PM, things have been humming around the ranch.

    The planned installation of the magnetos was slowed yesterday due to a parts failure.

    The good news is I picked out two ties for the cruise at the local clothing emporium which passed muster with Elaine.

    Since she is too busy to read the column, the truth is I had them picked out by the local store clerk.  Theory is that if you see a well-dress clerk in retail that is the person you ask.

    This morning, all I have to do is vacuum my office, drive up to the bank in Tyler, pick up steaks and seafood there, get a new stapler (OfficeMax stop), a liquor refreshments store stop, recover the websites if anything goes wrong with the SQL updates.  After that, a leisurely interview, shower, pack, documents ready…and by that time, it will be time to go lead Robin and Judy in.

    This is because in this part of Texas, there’s virtually no what to find our place.  Even the Post Office gets here unreliably at times.

    That’s because the road we live on has been variously named Anderson County Road 4416, AN.. County Rd.

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    Remember Our Pre-Holiday Rally?

    The one I’ve been mentioning lately?

    Well, here we is.

    (Unless you have a Grammar Police badge, please don’t try to correct the error of my ways or you’ll miss the phun of the “voice” of the column here…)

    The Dow and the S&P were up a shade over 1.8% Wednesday while the NASDAQ was up almost 2 1/2%.

    That’s pretty good, but like I was telling Peter Pham (Forbes) yesterday, our U.S. Aggregate Index that we use on the Peoplenomics.com side for insights into the market may have its own version of the old Dogs of the Dow Theory.

    Since 2013 the Dow is up about 7%, the S&P up 17.5%, and the NASDAQ up 34.5%.  Actually a little more since those were the numbers last weekend.

    Point is, there are always laggards and leaders.  One of the tricks to making wheelbarrows full of money so you too can have a fabulous life and go on cruises is to buy laggards and ride them up to the leader position.

    Rinse and repeat.

    All of which would make for a fine profession in life, except we all end up in the icebox at some morgue, so I want to have as much fun as possible.  More on the Pham interview in Coping which follows the more rational look at the world.

    The futures were up 70, but I’d be surprised if the market can hold those levels into the long weekend close.

    China Fears Overblown?

    Not, not necessarily…but maybe in a weird kind of way. 

    Remember how the markets were getting all panicky about the Shanghai Exchange slipping on a banana peel?

    Well the REAL thing to be looking at is how five CHINESE WAR SHIPS were sighted off Alaska.

    Here’s where we revisit the problem of common sense versus money fixations: 

    Which is worse:  Getting your butt handed to you in the SSE fall when our Global Index has been screaming be o u t of international  and our Aggregate Index has been short or neutral since the 4th of July, OR China flexing its muscles so when we get to the timeframe for our projected Manufacturer’s Resource Wars (2020-2026)?

    I don’t know about you, but gee, gosh, I expect that war thing to be a savory mix of EMP, tactical nukes, DNA specific bioweapons, in a buttery glass sauce with a lead finish.  A delightful menu choice and, since robots are coming, we can have many sides of tossed bodies topped with crumbled retirement flakes. Yeah…..

    In the meantime, what we need is a businessman (with vision) in  the White House and that’s been missing for 20+ years, so the whole thing sinks like Babylon, except that really means lost in the electronic noise here on the net, and it’s now spelled Babble On.

    This is human progress, for you.

    Consumer Alert:  I may have double dosed on my cynicism pills this mourning.  (No grammar badge, right?)

    It’s still a ways off, though, since the WaPo reports China is cutting 300,000 .mil jobs.  At least someone is thinking balanced budget on the planet.  Just happens to be the wrong country.

    Meanwhile, Back at the Rally:  Job Cuts

    Death by a thousand cuts, then, is it?  Stand by to be disappointed: The Challenger Job Cuts report is hot off der press release.

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