Rates going up

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executivejock's picture
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Seems there may be a steep decrese in disposible income when peoples credit cards and adjustable mortgages (35% of country) go up a few points.
Could this result in the opposite of trickle down.. More or less resulting in a steep drop in overall buying, housing stall and slight depresssion? Not to mention the continued inflation increase as China employees want higher wages and raw materials goes up? Damn I sound like a LIB.. They are transforming me! 

Greenhills's picture
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Hmmmmm.  Yes  Did this just occur to you?  There are a ton of major ramifications that are going to occur from all of this.  Just watch it all blow up sooner rather than later. All the clowns who bought homes that should never have been approved are going to walk away from houses that they are upside down on.  
Over the last few months many brokerage firms upped their buy ratings on the home builders.  Absurd!  Why did they do this?  So they could dump their own inventory of those stocks.  How about the sub prime lenders?  How about FNMA?  I hope you have been shorting stocks in these areas.   And yes I realize that some of the home builders were downgraded today.  A little late.  What a joke.
We are headed toward a big problem.  Just watch.  Take a look at the divergence between the ten year and spot gold.  Going all the way back to pre 1978 it has never been like this.  They will come back into parity and that means the ten year will go up and that will be the end of all of this crap in the real estate market.         

Greenhills's picture
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Read GloomDoomBoom "Mark Faber"  Do a search on google.  He discusses the possibliity of deflation.  He has paid subscription stuff  but he also has a good free website with a recent article under Market Comments that was good and on topic.  Good night.   

blarmston's picture
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Real Estate..... Ahh yes... The ONLY asset that guaranteed to apppreciate. This coming from a client who wanted to pull out 400K from his managed money portfolio to invest in a down payment on condo conversions in San Diego. Perfect. Further concentrate your investments into real estate... in san diego.... the third most overheated area in the country. and fire Consults managers that have returned 17% the past 6 years on average.... Ah yes, real estate.. The next great blowup that we will have to deal with for our clients.....

executivejock's picture
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Green.. Man I just threw it out there. I am a realist and realize nothing can go up 100% in 4-5 years. Every Tom, Dick and Harry is a mortgage broker (what a bs field that is, but they made billions).
Last year there was some minor hints that Fredie Mac and Fannie Mae were over leveraged.. Each day more and more of these no deposit adjustable loans are being pushed.
I guess to boot is the fact that the government is pumping every penny we have to keep the ship afloat. Everyday I see the worst waste of our tax dollars in the history of the world. The government has a workforce of spoiled children who demand their 3.5% raises when then dont do crap to earn 20k a year. Then on top of that everyone admits to theft, overtime abuse and everything between. Its amazing, but I guess we have to be smart and buy like bull in two -three years when things look good for us.
Its ironic that 5-10 years ago corporate America was as corrupt as ever. Everyone from CEO's, analysists, brokers, funds, specialists to PFA's were stealing at will. Now over the past five years its been the housing market. People who appraise, sell, analyze are full of shi.. Banks and the government for allowing stupid investors (buyers) to purchase with nothing down on adjustable rates. Maybe they do this since everyone knows big brother bails out everything under the sun. AMAZING!!!
Could Kudlo, Cramer and all those guys be up for fraud? Everyday they say how everything is wonderful.. Debt is great.. Overvalued and unjustifed real estate is great.. The market is undervalued so that is great.. Are these people LIBS.? I dont think anyone can look in the mirror and believe this crap..
I do believe the baby boomers are still sittting on large piles of assets.. They need our help and we need their business!

Revealer's picture
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17%?? Where do I sign up? Pretty darn good considering S&P is lower today than 6 yrs. ago. Very soon those mgrs. you use will have ALL the $$ in the entire world. Re: the economy...any one on this board old enuf to remember Stagflation? How about inflation created by energy with a stagnant economy created by too much leverage/wage competition from overseas/job pressures created by health care costs? Got any idea how serious this MAY get?

troll's picture
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executivejock wrote:
Could this result in the opposite of trickle down.. More or less resulting in a steep drop in overall buying, housing stall and slight depresssion?  

Uh, no. No "steep drop" and no "depression", "slight" or otherwise.

executivejock's picture
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God bless our conservative president BuSH, house and congress. This whole support the DOD has become an open house of abuse for every aspect of the govn. Then you have this BS SS system and FEMA.. After a month in Florida every Tom, Mary and Joe are getting new roofs, houses, cars and food stamps. Its complete BS how our sociecy is totally dependent.. NO ACCOUNTABILITY!

troll's picture
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Greenhills wrote:
Over the last few months many brokerage firms upped their buy ratings on the home builders.  Absurd!  Why did they do this?  So they could dump their own inventory of those stocks. 
ROFLMAO, like THAT wouldn't result in SEC fines that would kill any firm. What a friggin' paranoid you must be pal. 

executivejock's picture
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As for jobs.. I spent the past year reviewing wage data for most companies in America. Honestly the only people getting solid increases are government contractors. Its amazing these people are making like 25 bucks with a 2 dollar sign and 4% increase. Then the county is making .02% increase at $11 an hour. Its a joke, but at the same time housing goes up 100%. Two out of 10 companies have increased employee count since 2004. Now these industries are focused around mgf so its not really a surprise, but it means something.
I am not against the cycle of ups and downs. I just think its pathetic how extreme it could be? I guess that a would be could be analogy, but it looks black and white to me.
 

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Sounds like the asses on Wall Street repeated their excellent advice of 2ooo.. Remember the QCOM at 200 and Yahoo 300 billion (strong buy).. Everything those idiots said was a lie.. The IPO's at 100 billion and the strong buys on pigs and cats.com.
Who would have thought do the opposite of what Wall Street/majority do..
 

tjc45's picture
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executivejock wrote:God bless our conservative president BuSH, house and congress. This whole support the DOD has become an open house of abuse for every aspect of the govn. Then you have this BS SS system and FEMA.. After a month in Florida every Tom, Mary and Joe are getting new roofs, houses, cars and food stamps. Its complete BS how our sociecy is totally dependent.. NO ACCOUNTABILITY!
You're on a rant here, and I don't totally disagree, buTTTTTTT
Most of the houses, roofs, cars etc in Florida, and now on the gulf coast are being replaced by insurance companies, not the government. That's a business transaction, not a handout. The exception being those homes covered by Natl flood insurance program, the government paying you to rebuild in a flood zone, which I agree doesn't make sense.
Have you been to Punta Gorda? The place was wiped out. The people in this area accepting government assistance, usually in the form of low interest loans, are a long way from those porking it up on the government tit.
Lastly, think about this for a moment, imagine your practice was in Biloxi Ms. The town, and it's businesses are gone right now. Your biggest client, the biggest car dealer in Biloxi, is out of business and he's calling you to get liquid. So are the rest of your clients. Life has changed for everybody in your client book. There's no money for investing, everyone's in survival mode. How do you make a living? Scarey stuff! 

executivejock's picture
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I hear you man I lived down there for about a year (four months last year).. All of the homes and businesses down there are gone. Most of the people were happy with their lives. I think it makes one really think what is important.
When I rant it just amazes me what is going on... As for government funds FEMA is pounding out a lot of money.. I was just in Cocoa, Pensacola and Beloxi for two months (Pensacola beach to New Orleans is destroyed from storms). According to the locals there are a lot of people who were far from the storm getting FEMA funds to pay for damage and supplies.
The insurance companies do compensate a fair portion of the homes, but when they say times are tough (Katrina and Sept 11) the government pumps billions into their pockets. Our society of big brother bail outs and lack of personal accountability is crap.

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We are a pretty resiliant bunch .......people in general.....look what we have evolved from in 100 years. The sky is not falling, We often can't explain why things happen, until 2-5 years AFTER it's happened. So to try and predict ....is futile (with the exception of capitalizing on some obvious trends). Human reaction, interpratation and emotion have a lot to do with how things pan out (ther. Cramer (who is very entertaining), and the financial shows really sensationalize over the top. No one would watch if information were simply reported. Yeah.....real estate will probably make a correction, but I doubt it will be as devestating as most think, and if it is......we deal with it.
 

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executivejock wrote:
Sounds like the asses on Wall Street repeated their excellent advice of 2ooo.. Remember the QCOM at 200 and Yahoo 300 billion (strong buy).. Everything those idiots said was a lie.. The IPO's at 100 billion and the strong buys on pigs and cats.com.
Who would have thought do the opposite of what Wall Street/majority do..
 

You might want to paint with a narrower brush when you're talking about Analyst’s track records. Not everyone had strong buys (or even buys) on the high fliers in 2000. In fact, take a look at home builders now and you’ll see most aren’t “strong buys” and many have been recently downgraded. And no analyst I ever heard said to overweight clients into the “hot dots”, and forget about asset allocation.  That was the work of reps who forgot that trees don’t grow to the skies and/or lost the courage required to tell clients to take profits in the stock they (the clients) thought would climb forever. We’re supposed to be the people that clients talk to, to lose their (again, client’s) excessive exuberance  when the market’s up and excessive gloom when the market’s down.
<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> 
 
 

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Good points.. I truly dont understand what analysts do.. I was under the impression the IPO people at the firms were blowing fluff. So to me many of these people fall under same titles. Of couse I am wrong to do that.
Great point about informing those to keep a balaced portfolio and to sell a portion when things go crazy.. Did you know a few months before the .com bubble Rubin was a big guest speaker in VEGAS. He had a lot of big buyers and he stated he was down to 5% invested and they should do the same. At the same time many on wall street and CNBC were like BUY BUY BUY!! 

tjc45's picture
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moneyadvisor wrote:Yeah.....real estate will probably make a correction, but I doubt it will be as devestating as most think, and if it is......we deal with it.
I see it flattening out. Most of the boom in real estate has been fueled by home owners not speculators. Speculators have been along for the ride. Higher rates, if they come, and slower appreciation in the RE market may cool off the sizzling rate of appreciation. But personally, even if these things happen, and even if it goes a step farther and we go into recession, I'm not selling my house. And neither are all the the other home owners who bought houses, not as investments, but for a place to live. I too do not see a bust.

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Yeah, I dont really see a complete bust either (altough I hinted), since everyone needs a place to live. The issue I see are those with adjustable mortgages (35% of Americans) who are over leveraged. If rates on their mortgages and credit cards rise they could default. Coulda, woulda, shoulda is a pathetic way to think, but I have these deep thoughts.
Well only time will tell and it will be interesting. I hate to see that I (Mr. Optimism) wrote some of this doom and gloom crap. America is the best and we will move forward. Maybe I am schizoo?

tjc45's picture
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executivejock wrote:
Yeah, I dont really see a complete bust either (altough I hinted), since everyone needs a place to live. The issue I see are those with adjustable mortgages (35% of Americans) who are over leveraged. If rates on their mortgages and credit cards rise they could default. Coulda, woulda, shoulda is a pathetic way to think, but I have these deep thoughts.
Well only time will tell and it will be interesting. I hate to see that I (Mr. Optimism) wrote some of this doom and gloom crap. America is the best and we will move forward. Maybe I am schizoo?

And who's to say being schizo is a bad thing? Maybe a little paranoid tendency would be OK to.
Rates would need to climb up a long way for a long time to start pricing most people out of their houses. Along the way most would probably refinance into something longer term. Or at least they'd try. None of the scenarios on the board right now call for anything more than a normal rate cycle. Of course, if the banks start to over extend themselves and we start to get pressure on FDIC to clamp down on banks, and rates start up at the same time, while at the same time were experiencing record bank failures, that could put a wet rag on things. Oh,wait, that already happened. And we survived! Whew, close one there!

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Mikebutler-  You're clueless arent you.  You really believe what you said on here don't you.  You have no idea what goes on with the specialists and the brokerage firms do you? Do you know any market makers?  I do.  ANd their on the big board not some penny exchange. 
Dont you realize the brokerage firms trade in the very stocks they cover?  Don't you realize on a daily basis the specialists mess with the price of the stocks to screw you and your clients.  You don't think they drop a stock price down below support to stop you out so they can enter at a lower price.  You don't think they dont artifically raise the price of a stock to try to create a rally?  Why would a stock close at one price and open a buck higher when it did not get bid up on the after hours?  The specialist artficially raised the bid!  Look at the volume...there's the proof.   Once a week I would guess I spot a stock that the specialist is messing with.  If you watch close and track things you can spot it. 
Time for you to grow up and actually learn the realities of the business you work in.   

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Punta Gorda follow up by the way.
It didnt get wiped out.  We rented our place out down there to construction managers down to help rebuild.  Our place is right on the channel and still standing.  What are you taling wiped out?  Step out your back porch and take about 50 steps to your dock and onto your boat.  Five minute motar out to the bay. 
Darn nice place.  And it isn't wiped out.

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Only thing I don't like about Punta Gorda is it seems everybody in that town smokes.  Horrible habit.   I can't figure it out why so many of the people in that town smoke.   

troll's picture
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Greenhills wrote:
Mikebutler-  You're clueless arent you.  You really believe what you said on here don't you.  You have no idea what goes on with the specialists and the brokerage firms do you? Do you know any market makers?  I do.  ANd their on the big board not some penny exchange. 
Dont you realize the brokerage firms trade in the very stocks they cover?  Don't you realize on a daily basis the specialists mess with the price of the stocks to screw you and your clients.  You don't think they drop a stock price down below support to stop you out so they can enter at a lower price.  You don't think they dont artifically raise the price of a stock to try to create a rally?  Why would a stock close at one price and open a buck higher when it did not get bid up on the after hours?  The specialist artficially raised the bid!  Look at the volume...there's the proof.   Once a week I would guess I spot a stock that the specialist is messing with.  If you watch close and track things you can spot it. 
Time for you to grow up and actually learn the realities of the business you work in.   

I just paranoid rambling. Here's a hint, tinfoil hat wearer, a brokerage firm that puts a "buy" on a stock to unload their position is the stuff of paranoid conspiracy dreams.....

troll's picture
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Ugh... that should read "I just LOVE paranoid ramblings"....

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mikebutler222 wrote:Greenhills wrote:
Mikebutler-  You're clueless arent you.  You really believe what you said on here don't you.  You have no idea what goes on with the specialists and the brokerage firms do you? Do you know any market makers?  I do.  ANd their on the big board not some penny exchange. 
Dont you realize the brokerage firms trade in the very stocks they cover?  Don't you realize on a daily basis the specialists mess with the price of the stocks to screw you and your clients.  You don't think they drop a stock price down below support to stop you out so they can enter at a lower price.  You don't think they dont artifically raise the price of a stock to try to create a rally?  Why would a stock close at one price and open a buck higher when it did not get bid up on the after hours?  The specialist artficially raised the bid!  Look at the volume...there's the proof.   Once a week I would guess I spot a stock that the specialist is messing with.  If you watch close and track things you can spot it. 
Time for you to grow up and actually learn the realities of the business you work in.   

 
Mike-it may not be quite as clear-cut as greenhils paints it, but if you don't believe that kind of stuff goes on you're naive....there's big bucks at stake......
I just paranoid rambling. Here's a hint, tinfoil hat wearer, a brokerage firm that puts a "buy" on a stock to unload their position is the stuff of paranoid conspiracy dreams.....

blarmston's picture
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Joe Da Man- where the hell you been brotha? I thought you moved to Tibet and became a monk.

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Poor Mike.  He's a lost little kid in the land of big money.  Hey Mike, did you take a look at some of the action on stocks about 3 minutes before the bell on Friday?  No No it couldnt be.  Some people actually knew the Pres was going to announce the new Fed Chairman today! 
Yes, Mike, that's how things work on Wall Street.  You're going to be pretty upset one day when you figure things out. Don't believe me.  Ask Joe.  He'll explain it to you if he has time to kill.   I gotta go enjoy this wonder fall day now.  

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[quote=joedabrkr
Mike-it may not be quite as clear-cut as greenhils paints it, but if you don't believe that kind of stuff goes on you're naive....there's big bucks at stake......
 
All I'm telling you Joe is that in this regulatory environment a firm like ML or SB putting a "buy" on a stock to unload an inventory would require a conspiracy between analysts and traders that would raise a red flag the size of Texas. There’s not just money at stake there’s jail time and even an Arthur Anderson style death penalty involved. Nothing would please Spitzer more.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
 I'll simply add this to the long list of Greenhill's paranoid posts. 
 
 

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joedabrkr wrote:
Mike-it may not be quite as clear-cut as greenhils paints it, but if you don't believe that kind of stuff goes on you're naive....there's big bucks at stake......
 
All I'm telling you Joe is that in this regulatory environment a firm like ML or SB putting a "buy" on a stock to unload an inventory would require a conspiracy between analysts and traders that would raise a red flag the size of Texas. There’s not just money at stake there’s jail time and even an Arthur Anderson style death penalty involved. Nothing would please Spitzer more.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
 I'll simply add this to the long list of Greenhill's paranoid posts. 

 

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Greenhills wrote:
Poor Mike.  He's a lost little kid in the land of big money.  Hey Mike, did you take a look at some of the action on stocks about 3 minutes before the bell on Friday?  No No it couldnt be.  Some people actually knew the Pres was going to announce the new Fed Chairman today! 

 
Yeah, that's why stocks moved the last three minutes on Friday, because of a Fed Chair nomination today... are you sure it wasn't because the Masons called the Skull and Bones guys and reminded them about the deal they made last week with the Trilateral Commission?
Now, tell me again how an analyst in a real Wall Street firm is going to risk his livelyhood and his freedom because some guy in the trading shop is long and wrong. Geezee, these guys can't even get away with directed trades or after hour mutual funds trades any more and you think they're still that brazen? 

troll's picture
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SonnyClips wrote:Butler Let me paint a hypothetical picture for you. I know my colleague is "long and wrong" why wouldn't I risk putting out a buy rec to protect the firms holdings.
Say, Gasbag, shouldn't you finish your exam schedule before you join the lecture circuit on how the industry works? You might want to start by learning just how analysts are paid these days, just how a analyst working, probably, in another building, perhaps in another city from the traders, would become aware of the firms holdings, much less the holdings of the firm’s proprietary mutual funds in a highly liquid environment and how easy it would be for any regulator to track large sells coming out of a firm that just upped its rating on a given stock. When you’re learned those things you’ll learn how far-fetched the idea that a REAL firm would up its recommendation on a stock just to unload its holdings.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Say, here’s a blast from the past, why don’t you take a brief break from studying for some exam I took a decade ago, and  look into what happened at the “Cabot Market Letter” when THEY, a pissant newsletter advisor, working in a relatively dead regulatory environment upped their rating on a stock and sold at the same time. Then consider how much more active regulators are today, and how high profile firms could possibly get away with it.

 

blarmston's picture
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Ouch Sonny- M Butler just made you look silly.....

Greenbacks's picture
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Bottom Line
I would never listen to a wire house analyst! 
That would be like listening to Cramer!
My clients would never by it if it came from a wirehouse analyst!

troll's picture
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Greenbacks wrote:
Bottom Line
I would never listen to a wire house analyst! 
That would be like listening to Cramer!
My clients would never by it if it came from a wirehouse analyst!

Do they "by" it if it comes from you? Sorry, I couldn't resist.  

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Give Sonny a break.  He is studying his rear off and we all need a recreational break from that crap ( I'm studying the series 65 right now) or else we will go bonkers.  I agree we can waste too much time on this board. But, it could be worse....instead of wasting time here, where he might pick up a few pointers, he could be hitting happy hour at the bowling alley.
 

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SonnyClips wrote:And I did lecture at a University a few years ago, but your right it wasn't on this business it was on the philosophy of Rhetoric.
ROFLMAO, did you give refunds? Those who can do, those who can't.... misinform others....

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babbling looney wrote:
 But, it could be worse....instead of wasting time here, where he might pick up a few pointers,....

Perhaps he should read quietly and stop interrupting the adults. Then he could pick up some pointers. 

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That's good Mike.  He does sound like a child doesn't he.  

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mikebutler222 wrote:joedabrkr wrote:
Mike-it may not be quite as clear-cut as greenhils paints it, but if you don't believe that kind of stuff goes on you're naive....there's big bucks at stake......
 
All I'm telling you Joe is that in this regulatory environment a firm like ML or SB putting a "buy" on a stock to unload an inventory would require a conspiracy between analysts and traders that would raise a red flag the size of Texas. There’s not just money at stake there’s jail time and even an Arthur Anderson style death penalty involved. Nothing would please Spitzer more.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
 I'll simply add this to the long list of Greenhill's paranoid posts. 

 

One would logically think that to be the case.  But....the folks on the street, especially at the big firms, have a long proud history of finding way to sneak around the regulators.....

troll's picture
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blarmston wrote:Joe Da Man- where the hell you been brotha? I thought you moved to Tibet and became a monk.

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