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Jeffrey P. Snider

Jeffrey Snider

Jeffrey P. Snider is the head of Global Investment Research of Alhambra Investment Partners (AIP). Jeffrey was 12 years at Atlantic Capital Management where he anticipated the financial crisis with critical research. His company is a global investment adviser, hence potential Swiss clients should not hesitate to contact AIP

Articles by Jeffrey Snider

Nasty Number Five, Not Hawk Hiking CBs

2 days ago

It’s not recession fears, those are in the past. For much if not most (vast majority) of mainstream pundits and newsmedia alike, unlike regular folks this is all news to them (the irony, huh?) Economists and central bankers everywhere had said last year was a boom, a true inflationary inferno raging worldwide.
For once, CPIs (or European HICPs) seemed to have confirmed the narrative. Unlike 2018 when inflation indices kept policymakers and their forecasts out in the cold, 2021 sure appeared to be different.
Yet, it wasn’t. Apart from specific price behavior (supply shock, neither money printing nor an overheating economy), the underlying not-recovery pattern has repeated. Markets worldwide picked up on these key distinctions which, as usual, were never reported

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The Everything Data’s (Z1) Verdict: Not Inflation, Only More Of The Same

3 days ago

The only thing that changed was the CPI. What distinguishes 2021-22 from the prior post-crisis period 2007-20 is merely the performance of whatever consumer price index. This latter has been called inflation, yet the data conclusively support the market verdict pricing how it never was.
What data? The “everything” data, the most comprehensive financial and monetary compendium yet available: The Financial Accounts of the United States, or Z1. While this doesn’t quite cover the entirety of shadow money out there, it’s as close as we might currently hope to get.
Some will say that QE6 represented a change, or that government interference particularly Uncle Sam’s “helicopters” were absolutely unprecedented.
Whereas maybe QEs 1 through 5 hadn’t been enough “money

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Everything Hitting The Global (eurodollar) Wall

6 days ago

Over the weekend, Bitcoin tumbled again. Reaching an ultra-ugly low of $17,641 (before retracing back above $20k), even the self-styled premier digital “store of value” has thrown in the towel. As I wrote last week, winter isn’t coming it is here.
One crucial reason why, the Japan’s Ministry of Finance reported last week how imports into that country during the tumultuous month of April surged by a frankly ridiculous 48.9% year-over-year. It was the biggest annual gain since 1980, very much like US CPI rates the highest in four decades.
With numbers like those, most mainstream outlets can’t help but characterize them as “strong domestic demand.” It’s an understandable if still egregious error.

Winter Is Here for crypt.

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Sad. Predictable.
Prices were

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Angry April TIC Zeroed In On China’s CNY and Japan’s JPY

8 days ago

If the March gasoline/oil spike hit a weak global economy really hard and caused what more and more looks like a recessionary shock, a(n un)healthy part of it was the acceleration of Euro$ #5 concurrently rippling through the global reserve system. This much was apparent right from the start, with financial markets gone haywire three months ago (mid-March seasonal bottleneck), and then more of the same into April right to now.
The updated TIC data for the month of April is everything we already expected, including the usual after-the-fact corroboration of the situation displayed to us in real-time by market performance. The stand-outs were definitely Japan and China, both JPY and CNY together careening towards the eurodollar, global recession risk abyss.
Before

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Sorry Chairman Powell, Even FRBNY Now Has To Forecast Serious and Seriously Rising Recession Risk

9 days ago

At his last press conference, Federal Reserve Chairman Jay Powell made a bunch of unsubstantiated claims, none of which were called out or even questioned by the assembled reporters. These rituals are designed to project authority not conduct inquiry, and this one was perhaps the best representation of that intent.
Powell’s job is to put the current predicament in the best possible light, starting by downplaying the current predicament. From there, to try to get the public to believe the Fed has the tools, the willingness, and the resolve to deal with it – first convincing people policymakers have correctly identified the problem.
From the political perspective behind all this, everyone’s been told that’s inflation.
But how does the Fed replace Russian oil on

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Curve Inversion 101: US CPI Politics Up Front, China PPI Down(ing) The Back

13 days ago

While the world fixated on the US CPI, it was other “inflation” data from across the Pacific that is telling the real economic story. Having conflated the former with a red-hot economy, the fact American consumer prices aren’t tied to the actual economic situation has been lost in the shuffle of the FOMC’s hawkishness, with markets obliged to price wrong-way Jay.
The short end of the yield curve (USTs and elsewhere) is plotting like FOMC dots, whenever oil and crude factors raising the ceiling maybe short-term duration of the Fed’s rate hikes.
Since these are pure theater, the curve’s far end is looking elsewhere for what the economy is really about.

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Inversion is simply these two competing sets: Fed playing inflation-fighter for the cameras pushing

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It’s Not Nothing, It’s Everything (including crypto)

14 days ago

Markets got aggressive long before the FOMC did. Everything, and I mean everything, has been trending the other way. Jay Powell says inflation risks are most pressing when markets have consistently priced the opposite for a whole lot longer.
It’ll be revised history when ultimately the mainstream attempts to write it over the months ahead, many will try to snatch some limited victory from the jaws of defeat. Should recession happen and bring an end to the “inflation”, just ask Target and Chinese producers, the Fed Cult will claim a few rate hikes were enough to scare off the Phillips Curve (which the cult alone imagines).
Even these Volcker-like whispers are an acknowledgement the Fed maybe, kind of could be wrong here.
Start with cryptocurrencies, those like

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Prices As Curative Punishment

15 days ago

It wasn’t exactly a secret, though the raw data doesn’t ever tell you why something might’ve changed in it. According to the Bureau of Economic Analysis, confirmed by industry sources, US new car sales absolutely tanked in May 2022. At a seasonally-adjusted annual rate of 12.7 million, it was a quarter fewer than sales put down in May 2021 and 13% below the not-great level from the month prior in April 2022.
Such puny results have typically been reserved for those heavily diseased months of whichever COVID variant or wave, except there was no new coronavirus-inspire disruption this time. Buyers appear to have disappeared, gone on strike for other reasons than the usual 2020 stuff.

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The list of suspects for any strike was always thin. First up, gasoline prices.

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Update The Conflict of Interest Rate(s)

16 days ago

What changed? For over a month, the Treasury market had the Fed and its rate hiking figured out. Rising recession risks had been confirmed by almost every piece of incoming data, including, importantly, labor data. It is the jobs market where much of the official “inflation” jawboning is centered, all that Phillips Curve stuff.
So, whatever might seriously undermine Phillips would put the end to the rate hikes in sight. Short-term Treasuries therefore ignored everything that happened between late April and the end of May, the key 2-year note sideways to lower over those six weeks projecting forward that very end to Powell’s plan.
On May 30, however, the Europeans insinuated themselves via the Russian conflict. While America was solemnly observing the Memorial Day

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Simple Economics and Money Math

17 days ago

The BLS’s most recent labor market data is, well, troubling. Even the preferred if artificially-smooth Establishment Survey indicates that something has changed since around March. A slowdown at least, leaving more questions than answers (from President Phillips).
That as much because of the other employment figures, the Household Survey. April and May, in particular, not just a slowdown but a drop in overall employee count. As I pointed out last Friday, a 2-month negative is highly unusual except when the US already experiencing serious weakness, downturn, maybe more.

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Given these, it might be time to revisit jobless claims and unemployment insurance. Quite unlike the unemployment rate, the number of American workers who are filing for initial verification of

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“Inflation” Not Inflation, Through The Eyes of Inventory

18 days ago

It isn’t just semantics, nor some trivial, egotistical use of quotation marks. There is an actual and vast difference between inflation and “inflation.” And in the final results, that difference isn’t strictly or even mainly about consumer prices.
Who cares, most people wonder. After all, what does it really matter why prices are going up so far? The pain this causes is pain regardless of any post hoc pedantry.
Insisting on proper terminology, however, is an attempt to get people to focus up on the future, not litigate the past. It may seem the latter, though the stakes are far higher moving forward than debating what has already happened.
What happened was never inflation. Sorry, it just wasn’t (and don’t need to take my word for it). But anyone is forgiven for

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A Volcker Pan Recession

19 days ago

The Volcker Myth is simple because there isn’t math for it just voodoo economics (to borrow George HW Bush’s phrase). In theory, the FOMC finally realized after more than a decade of currency devastation and its economic, financial, and social consequences, hey, inflation and money.
Once Paul Volcker took over in ’79, he acted on the belated realization, seeking to get the Great Inflation under control by restricting, well, something that seems like money.
All the Fed had by that point was bank reserves, so they gave it a go. Late in 1979, authorities restricted bank reserves with kind of an expectation, more like pure hope more costly reserves would constrict depository money.
And if they did, that would limit bank credit and then money flowing into the real

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May Payrolls (and more) Confirm Slowdown (and more)

22 days ago

May 2022’s payroll estimates weren’t quite the level of downshift President Phillips had warned about, though that’s increasingly likely just a matter of time. In fact, despite the headline Establishment Survey monthly change being slightly better than expected, it and even more so the other employment data all still show an unmistakable slowdown in the labor market.
What’s left open for argument and concern is now a matter of how much of a downside there might end up being. Politicians and other officials have confidently reassured the public this is a natural and welcome progression or transition from red-hot inflation-y to, in the President’s word, stability.
Markets (inverted curves) are stridently betting there’s more to it than that; and by more, they’ve

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No Pandemic. Not Rate Hikes. Doesn’t Matter Interest Rates. Just Globally Synchronized.

23 days ago

The fact that German retail sales crashed so much in April 2022 is significant for a couple reasons. First, it more than suggests something is wrong with Germany, and not just some run-of-the-mill hiccup. Second, because it was this April rather than last April or last summer, you can’t blame COVID this time. Something else is going on.

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In America, the Fed Cult is out to take credit for this brewing downturn (Jay Powell seeking his place alongside Volcker, which more people need to realize just what absurd fantasy that would really mean). Since this being German consumers facing their fate, a third helpful facet of their persistent downturn-iness is how it can’t be the Fed.
Unlike America’s (fake) central bank, Europe’s (fake) central bank is still QE-ing. Rate

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Follow China’s True Line

24 days ago

It’s a broken a record, the macro stylus stuck unable to move on, just skipping and repeating the same spot on the vinyl. Since Xi Jinping’s lockdowns broke it, as it’s said, when Xi is satisfied there’s zero COVID he’ll release the restrictions and that will fix everything. The economy will go right back to good, like flipping a switch.
Where have we heard that before?
Everywhere, actually, but especially in China. Whether early last year, last August, and now again over the past few months, focus has been (intentionally) maintained on overly aggressive pandemic policies as the catchall for every bad number and vibe.

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Just last week, the country’s National Bureau of Statistics (NBS) reported a substantial decline for Industrial Profits, typically a particularly

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ADP Front-Runs BLS and President Phillips

25 days ago

It’s gotten to the point that pretty much everyone is now aware of the risks. Public surveys, market behavior, on and on, hardly anyone outside politics thinks the economy is in a good place. Gasoline, sentiment, whatever, Euro$ #5 in total is much more than what’s shaping up inside the American boundary. Globally synchronized of which the US is proving to be a close part.
The destination, or depth, really, is what’s left to argue. As noted yesterday, even President Joe Biden has taken to talking down economic expectations.

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He singled out the labor market, in particular, for the reasons I discussed – making him President Phillips from here on.
In consultation with the rate-hikers at the Fed, he’s been coached into the Phillips Curve – pretending that the

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Can’t Blame COVID For This One

26 days ago

Late in March 2021, then-German Chancellor Angela Merkel announced a reverse. Several weeks before that time, Merkel’s federal government had reached an agreement with the various states to begin opening the country back up, easing more modest restrictions to move daily life closer to normal. But with case counts sharply rising once more, the whole thing was going to get shutdown instead.
The government declared a holiday starting April 1 (no fooling) last year, lasting three days while totally banning any large public gatherings (except those by and for government officials, obviously) for nearly a week. Other restrictions were either applied or kept in place.
You know the drill.
As a consequence of these draconian measures, retail sales in Germany crashed. Of

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President Phillips Emerges To Reassure On Growing Slowdown

27 days ago

Just the other day, President Biden took to the pages of the Wall Street Journal to reassure Americans the government is doing something about the greatest economic challenge they face. Biden says this is inflation when that’s neither the actual affliction nor our greatest threat. On the contrary, recession probabilities have sharply risen as the real economy slows down given the emerging downside to last year’s supply shock.
One thing we might agree on, the President told the country to expect a slowdown primarily in the labor market from here on.

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In consultation with the rate-hikers at the Fed, he’s been coached into the Phillips Curve – pretending that the Federal Reserve’s policies will cool down a supposedly red-hot labor market therefore no one need

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Peak Policy Error

28 days ago

Another economic discussion lost to the eventual coronavirus pandemic mania was the 2019 globally synchronized downturn. Not just downturn, outright recession in key parts from around the world, maybe including the US. We’ll simply never know for sure because just when it was happening COVID struck and then governments overrode everything including unfolding history.
What anyone can say for sure is that 2019 hit a rough patch where there was only supposed to have been smooth sailing. The Federal Reserve rather embarrassingly had pitched a sequence of rate hikes needed to further smooth out the sailing only to instead begin battening the hatches with rate cuts (and then, following some “unknown” flash in repo markets, not-QE5).
However much it went wrong, we all

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Inventory Flood Continues Just As Consumers Tap Out

29 days ago

If it continues to play out the same way, it would be all the worst scenarios lumped together all at the same time. A real unfortunate convergence, yet one that has been entirely predictable.
Consumers reaching their absolute spending limits. Warehouse and storage capacity nationwide dwindling to long-time lows, leaving firms no options to store inbound goods. And, of course, the stream of goods into inventory that shows no signs (yet) of letting up.
Taking the last one first, today the Census Bureau reported its advanced estimates for wholesale and retail inventories.

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To start with, the figures for March were already excessive; in retail, the month-over-month change (seasonally-adjusted) had been the second highest on record, behind only December.
The

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‘Unconscionably Excessive’ Denial

May 30, 2022

What would “unconscionably excessive” even look, legally speaking? More to the issue, who gets to decide what constitutes “excessive?” The way the phrase has been inserted, it’s as if Congress today seeks to plant its members on some incorporeal higher plane than mere physical substance, too, diving deep into the moral consciousness of the nation and economy in order justify taking general action.
Just last week, the House of Representatives passed a bill which proposes to tackle “inflation”, specifically the ridiculous gasoline prices currently plaguing Americans. The vote ended up being 217-207, with four Democrats siding with all Republicans against the proposal.
Styled The Consumer Fuel Price Gouging Prevention Act, slightly more than half of half of the US

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Is It Being Demanded?

May 29, 2022

Shipping container rates have been dropping since early March – right around the time when we had just experienced our “collateral days” and then stood by to witness chaotic financial fireworks, inversions, the whole thing. The bane of the logistical supply-side snafu-ing, it has been container redistribution mucking the goods economy up.The recent and sharp decline in container rates, according to Freightos, is because China’s been closed down by Xi’s pursuit of his madman persona. With Shanghai locked up, freight just hasn’t been able to move.
In the meantime, with manufacturing still restricted, transpacific ocean rates continued to fall.
Asia – US West Coast rates fell 18% this week to $11,455/FEU and are 28% lower than at the start of the lockdown in late

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Hong Kong Stocks Pivot Euro$ #5

May 28, 2022

The stock market hasn’t been moneyed; well, US equities, anyway. What do I mean by “moneyed?” Common perceptions (myth) link the Federal Reserve’s so-called money printing (bank reserves) with share prices. Everyone still thinks there’s a direct monetary injection in this case by the central monetary agency which causes stocks to rise for no good reason.
While we don’t have to argue the Fed’s bank reserves here, the truth of the matter is stocks have been severed from any part of the actual and effective monetary system since 1929.
First, the collapse in share prices started the severing before government regulation finished the job generations ago.
This is why, for example, the Crash of ’87 is remembered exclusively in Wall Street legend rather than the first

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Crude Contradictions Therefore Uncertainty And Big Volatility

May 18, 2022

This one took some real, well, talent. It was late morning on April 11, the crude oil market was in some distress. The price was falling faster, already down sharply over just the preceding two weeks. Going from $115 per barrel to suddenly less than $95, there was some real fear there.
But what really caught my attention was the flattening WTI futures curve. Up in the liquid front, it was closing in on contango and had it achieved that reshaping it would have been, the point of my article, a key warning sign of more widescale deterioration.

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No sooner had I hit publish, the whole thing reversed. Within basically a few hours of going live, the entire marketplace turned right around and hasn’t come back since. Not only have oil prices rebounded from that low,

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Peak Inflation (not what you think)

May 15, 2022

For once, I find myself in agreement with a mainstream article published over at Bloomberg. Notable Fed supporters without fail, this one maybe represents a change in tone. Perhaps the cheerleaders are feeling the heat and are seeking Jay Powell’s exit for him? Whatever the case, there’s truth to what’s written if only because interest rates haven’t been rising based on rising inflation/growth expectations.
Quite the contrary, actually. It’s all FOMC and the politics behind its rate hikes.

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Rate hikes are demanded from up on high so that the government can appear to be doing something about “inflation.” If, however, the rate of consumer price change begins to decline, so might the political pressure, therefore the end of rate hikes and likewise should end the

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Synchronizing Chinese Prices (and consequences)

May 14, 2022

It isn’t just the vast difference between Chinese consumer prices and those in the US or Europe, China’s CPI has been categorically distinct from China’s PPI, too. That distance hints at the real problem which the whole is just now beginning to confront, having been lulled into an inflationary illusion made up from all these things.
To start with, yesterday China’s NBS reported the index for its consumer prices rose 2.1% year-over-year in April 2022. That’s up from 1.5% year-over-year in March, but on the basis of base effects and a rebound (from falling) in food prices. This rate is indistinguishable from pretty much every other month since China like the rest of the world dropped off in 2012.

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Yet, with consumer prices so well behaved, downright tame compared

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Neither Confusing Nor Surprising: Q1’s Worst Productivity Ever, April Decline In Employed

May 13, 2022

Maybe last Friday’s pretty awful payroll report shouldn’t have been surprising; though, to be fair, just calling it awful will be surprising to most people. Confusion surrounds the figures for good reason, though there truly is no reason for the misunderstanding itself. Apart from Economists and “central bankers” who’d rather everyone look elsewhere for the real problem.
The Establishment Survey was right in the (statistical) zone, so for most of the public the labor market looks good. However, as I pointed out last week, the “other” labor data pointed to potentially serious problems in April; first decline in it, and a big one, since April 2020!

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When the BEA previously reported that negative for Q1 GDP, it was likewise dismissed as quirky and

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Eurobonds Behind Euro$ #5’s Collateral Case

May 12, 2022

The bond market is allegedly populated by the “smart” set, whereas those trading equities derided as the “dumb” money (not without some truth). I often wonder if it’s either/or. The fixed income system just went through this scarcely three years ago, yet all signs and evidence point to another repeat. So, how smart can Eurobond agents really be if they’ve gone and done it again?
What is it?
Let’s roll the clock back to the landmine of 2018. Collateral shortage, financial chaos, rising dollar and all that stuff.
But, Argentina has been an absolute darling, a media frenzy and Wall Street hero.
Since 2016, the Eurobond market had embraced this long-shunned section of South America. Where before this poor country couldn’t sell one single dollar in securities no

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Industrial Synchronized Demand

May 11, 2022

Are the industrial commodities starting to get a whiff of demand side rejection? Short run trends suggest that this could be the case. From copper to iron and the highest (formerly) of the high flyers, aluminum, this particular group has been exhibiting a rather synchronized setback going back to the end of March, start of April.
This despite supply bottlenecks and production shortfalls which continue to plague each. Copper has now fallen to its lowest since last October, while iron’s 2022 rebound came to a screeching halt as it heads downward again. As to the latter, the Chinese reported a serious decline in demand for the raw metal that goes a long way back before April 2022.

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By value, China’s imports of iron bounced like the commodity’s price had, yet

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Who’s Playing Puppetmaster, And Who Is Master of Puppets

May 9, 2022

Cue up the old VHS tapes of Bill Clinton. The former President was renowned for displaying, anyway, great empathy. He famously said in October 1992, weeks before the election that would bring him to the White House, “I feel your pain.”
What pain? As Clinton’s chief political advisor later clarified, “it’s the economy stupid.”
Jay Powell is no retail politician in near the same company as Mr. Clinton. Yet, the Federal Reserve’s current Chairman is attempting to channel his inner-stupid anyway.
Announcing the Fed’s first 50-bps rate hike in almost exactly two decades, this bureaucrat clumsily prefaced his post-FOMC press conference with a gimmick as if blatantly running for some office.
Before I go into the details of today’s meeting, I’d like to take this

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