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tv   The Pulse  Bloomberg  October 6, 2014 5:00am-6:01am EDT

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>> france is not finished. the prime minister hits london. come back of the century. business leader leaps into second place. hp heading for a breakup. it may be splitting off its pc and printer arms. good morning to our viewers in europe.
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a warm welcome to those waking up in the united states. i'm guy johnson. this is "the pulse." we are here in london. what have we got for you? to infinity and beyond. why this concept car is shaking seen? ultraluxury how one london restaurant is reeling in the chinese tourists. let's get straight to our top story. two top stories. the french prime minister is in london meeting with david cameron a little bit later. he is here to defend france and his government's economic subsidy. the charm offensive comes after one british executive called france hopeless and downbeat. can the prime minister reverse these kinds of views? she is back, ladies and gentlemen.
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my cohost, francine lacqua. what a perfect day to be back in the office -- or not, as the case maybe. >> a rainy london day. like i have never left. it is business as usual. the prime minister of france is right here in the center of the city of london in just under an hour. he is here to say that france is open for business. he said, we want businesses and we will support businesses. i have a fun fact for you. france is the top eu destination for u.k. investment. u.k. businesses invest more in france than they do more in germany. 3 billion euros of investment.
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u.k. companies created about 2500 jobs in france. the prime minister is coming here saying, invest more in our country and do not let the only by headlines, not the managing director, but what has been reported elsewhere. a lot of people are a press with just the citizens think that and a citizens think the case defense citizens think that france stands for working 35 hours per week. the british economy is growing faster than france's
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right now. with this going on over here, why should we put money over there? >> the million, trillion dollar question. france is still an investment in his eyes. this is a country that is tough to sell. his message will be, trust me, i am the new guy, i'm brash, i do what i think. i will get the socialists to back me. cut about 50 billion euros in government spending and channel that back into tax cuts for businesses. he wants to make it a more business friendly place. >> it is interesting. that hollande needs to get out of the way and let
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the prime minister do his job and deliver. has the prime minister got the mandate to make it happen? does. the moment, he his popularity rate has fallen. he was appointed in april. in the latest poll, he is only a 33%. he has a very short window. a very short amount of time to push through the reforms and then there is all the debate going on about the budget deficit. it is the beginning of what was the problem in 2008. a lot of countries did not stick to the budget deficit. maybe france will get a big slap on the wrist. they say they will reset the target by 2017. if there is a clash between france and brussels, i wonder who wins. >> there are number of papers
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that say the could be a clash over the next few days. francine, lovely to see you back. out in the rain, day one. despite the rain, chasing the french around. anyway, let's move on from the french to what is happening in brazil. come back in brazil. the first round of presidential elections show the candidate jumping into second place forcing a runoff with the president. , let's talk about what happens now. business would like to see this guy win. nobody expected him to get this far and now he is this far. can he make it all the way? people are saying that it may be difficult. two reports today are saying it
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is very unlikely he will win. , it alsok at the polls seemed very unlikely he would get more than 21% of the vote and he ended up with 33%. i think writing him off right now may be risky. it seems it will be very difficult. silva's voters vote in the next round? >> it is the critical question. -- did note done in endorse anybody. indicated she already that she may support a candidate. when she decided to run, she said that she thought change was needed. she decided to run this year, she said she thought it was time for a change. that was read as an indication that she will support.
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of thedoes the tone conversation change as we head into the second round? do you think she is going to have to change the town, change the direction as we head into the second round? >> i think all the bets are that it will get even more negative. neves belongs to a party that governed in the 1990's. all be about how the 1990's were terrible. that will be the crux of the discourse. willves' side, there likely be a lot of discussion about the corruption scandals going on right now. those will be two of the main things. criticismve to defend that he wants to do away with welfare programs. it will be something that he
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will have to stand up to and convince voters that that is not the case. >> thank you for the update. drigo, joining us from bloomberg news. we will have more from the director of king's college london. we will spend a little bit of time talking about the second round. let's get back to corporate news. hp is on the verge of splitting in two. here with more on this huge step is caroline hyde. >> deja vu. a slight u-turn, it seems to me. >> quite a big one. >> meg whitman said she will not stating --ugh on splitting the company. you have to re-create the whole thing if you do that, she said.
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they decided not to in 2011. they lost the number one spot to lenovo in pc makers. they missed the boat in the move to mobile. they want to be free, they want to be unchained, they want to go on the cloud. it seems that hp slightly missed the boat. they are playing catch-up in terms of the need to move and they are really focusing on the future growth area. maybe they want to be more lean, mean, and a little bit more dexterous. they can before more flexible by splitting the business. on the one side, half of the the pcs and the hardware. meg whitman is going to be chief executive of the technology solutions bit, the enterprise
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focus side. she will still be the chairwoman of the pc unit as well, but clearly they feel to be that much more agile, they need to do this. it does seem that big companies in silicon valley are looking to reorganize themselves, taking advantage of changes that are happening. we saw the ebay-paypal thing happening. apple is also spurring change. >> i think that is right. hewlett-packard put silicon valley on the map. these huge jug and arts -- juggernauts have not managed the winners of late. the kings of silicon valley are apple.
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you are able to work across one document within all the types of hardware. apple has been doing very well. amazon has been doing phenomenally well. they have made it so much more financially viable to have website hosting, to have software in the cloud. work now competes with microsoft in terms of your spreadsheet, in terms of your documents. microsoft has satya nadella putting the cloud first and mobile first. ebay spinning off paypal. we have all of these companies having to shake things up so that they can reorient tate themselves -- reorient themselves. hewlett-packard is hoping to drive that one forward. >> thank you.
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we are going to take a break. still ahead, france's prime minister is trying to improve relations with the u.k. ♪
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>> good morning. welcome back. let's get back to our big focus of the morning. the french rhyme -- prime
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minister is on a charm offensive in the u.k. this morning. he is meeting with david cameron. he will make a case to investors on why they should not give up on france. let's talk a little bit more about with all of this. good morning. valls be received? >> i think they want to be friends. valls wants david cameron's support for the battle to slow down the reduction of the budget wantst and david cameron valls' support in the renegotiation in europe. they both need each other, but they come from different parts of the political spectrum. the political agendas are very different. >> do you think there is a huge
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fear and france of what david cameron may ultimately do in shaking up the story in brussels? the treaty changes? valls isomething that praying does not have momentum. made itois hollande clear that he does not want david cameron to go ahead with treaty change. that would mean a referendum in france and that has always been bad news in france and particularly bad news for the socialist party. be praying for david cameron does not go on about that. they want to focus on the economy. tos is valls' chance to come london and say, we are really serious about reform. take us seriously and don't go along with all of this stuff. >> do you think he has any chance of changing attitude? that thenot forget
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french have done better on their budget deficit than david cameron has done. on growth, clearly france is bumping along the bottom, where is the british economy has started to pick up. i think you will find it a very difficult sell. >> right. [laughter] how did the french feel about cameron's relationship with angela merkel? >> everybody knows that david cameron gets on well with angela merkel from a purely personal chemistry point of view. the french relationship with angela merkel has never really got to where it should be, as the two great motors of the european economy. they see the whole eurozone crisis from very different perspectives. the idea that angela merkel is phil hammering away on figure
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budget deficit down, you have to have austerity before you have growth, that is not what valls and hollande figure. -- not here. -- want to hear. valls toollande wants do his business. it is not a matter of stepping out of the way. valls to chance for start implementing the return -- reform program. they are nervous about the national front in france. the far right is a big threat. that is one thing that france and britain have in common. they both face the biggest eurosceptic backlash in any of the countries in europe. >> how easy is it to make the case to business, investing my country when you have the national front story and the
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improving polling and the conflagration of all of that? you layer the politics in the next couple of years on top of that and it becomes more difficult. >> the french political evention is actually come david cameron must feel that somebody has got it worse. [laughter] valls' talking about at 32 percent. francois hollande's popularity is at 13%. it is the worst of a french president ever. of the far right producing a president for france at the next election would be a nightmare. the second round seemed to act as a catalyst to get everybody else on board. you needlk about come a catalyst, you need something to turn the economy around.
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the late 1970's, they changed the momentum eventually and you see similar things in germany. do we need that kind of moment? will the next 18 months produce the kind of fear that starts to galvanize a story? >> i think france does need a big political shock to change the deep-seated resistance to serious reform, reform in the labor market, and structural reforms to a state dominated economy. i think france does need a shock. i don't think it has quite gotten there yet. having said that, europe is a very interrelated place, particularly the eurozone. nobody wants france to go down in a great big shock because it will drag everybody else down. tonce is desperately looking germany to boost the growth rate and invest more come a so that overall, they are all picked up. >david cameron is looking to
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germany to get what he wants an european reform. everybody is waiting on angela merkel. >> as always. thank you very much indeed. we are back in a couple of minutes. ♪
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>> welcome back. infiniti has exploded onto the unveiling aneen by
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ultra hybrid -- ultraluxury hybrid car. it could be the green car of the future. ♪ >> i think the automobile is not purely a functional object. it is about the romance of movement, it is about dreaming. inspiration.g this represents our upper premium composition. imd executive design director for infiniti. ♪ designing the interior, the portal doors open wide. is a driver's car company. area, the wonderful
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leather wraps around the driver, you feel connected to the road. proportion and gesture for me is the thing that i really wanted to capture. we created a five meter long car. we also slid the cabin back. it is coming back smoothly. it comes to a point. all the movement of shape comes back and then they celebrate our wonderful company. ♪ this texture right here is the fluting that opens and closes. the citycar comes into and the engine needs to breathe, the fluting opens. when we are designing a car, we are not checking boxes and see what our competitors are doing. we find a customer that want something special and we go for it.
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we want to be known as a company that makes these objects of rarity. >> ok come a we are going to leave fast cars and talk about the economy after the break. we have a new boss of the central bank in south africa. we will go to johannesburg to find out everything we need to know. ♪
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good morning, everybody. welcome back. you are watching "the pulse." we are live from london. i'm guy johnson. these are the top headlines. predicts china will grow at 7.4% this year. german factory orders slumped the most since 2009. the risk of a slowdown in europe oslo economy. -- europe's largest economy.
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the french prime minister is in london to explain his economic strategy. "hopeless" and "downbeat" about the meeting according to a ceo. marketsnd out how the are dealing with the news. losses.eeks of friday.lose we saw significant gains. the bit of a catch-up rally on the dax. you see out performance on germany. i wanti get to the euro, to talk about some numbers. $914 billion. that is the amount that s&p 500 companies are poised to spend on buybacks and dividends.
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in 2014.5% of earnings unreal. it is called financial engineering. if you want to engineer a bull market, that is i you do it. orders dropping by 5.7%. it is not just about the dynamic with russia and the fed being a bid -- big trade partner, it is about the eurozone as well. the drop-off is remarkable. you are looking at around 10%. monday to friday, big gains for the dollar. friday was pretty incredible. gains across the board. the dollar high against every d10 currency. -- g10 currency. i want to bring up bonds for you right here. treasuries. the dollar breaking higher in treasury years will break
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higher. yields.european the 10 year yield in germany, 0.19% -- 0.91%. maybe you go over to the u.s.. maybe that explains the story. of potential difficult explanations around the treasury market right now. thank you very much indeed. tom keene joins us from new york. we are all digesting the payrolls. what do you have tom? the jobs report. jeffrey rosenberg will join us. we will go cross asset. the real asset interests are commodities. you mentioned gold and jonathan ferro mentioned gold. we will talk about the ramifications for markets on the very good jobs report and the debate over what the fed will do next.
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weekend, another one falls. forget about ebay. ibm dumping their computer business. hewlett-packard will split in two. for those of us who are fossils, this is a really big deal. hp is truly a chronic. they are going their own way. phil george will join us. cast phil george will join us. he has been a strong advocate. ill george will join us. he and his. brazil this morning. -- he will join us. he has been a strong advocate. brazil this morning. >> amazing. looking forward to that conversation. thank you so much. tom mentioning what is happening in brazil. let's talk about what is
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happening in south africa. the fed chair kganyago has been head of the reserve bank. he was one of two that was expected to potentially phil the seat.- to fill fill the has been deputy central bank governor since 2011. spent moreat, he than seven years at the national treasury where he was director general. he is very well known in the public policy world and is very well known in financial markets. policyed develop fiscal involved in the borrowing plans of the government. all in all, this was taken as a
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very positive appointment. relief thata bit of the president has appointed someone that was credible. a prettygoing to have tough time of it, isn't he? the dollar is strengthening. the current account deficit is a big problem for south africa. what are the priorities when it comes to the challenges? >> exactly like you said. the currency has weakened quite a bit. we have inflation pressures building in the country. at the moment, the main challenge for the incoming central bank governor will be to try to bring the inflation rate back into the target range. while at the same time keeping monetary policy accommodative enough so that it is supportive of the economy. we have economic growth at the moment that is said to be the
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slowest pace since the 2009 recession. policymakers have been in quite a dilemma, unable to raise interest rates while still being supportive of the economy. i think you are going to see the incoming governor kganyago implementing a monetary policy stability, so we will see gradual increasing interest rates in order to maintain that continuity. >> thank you very much indeed. joining us from johannesburg at the bloomberg news office. coming up, battleground brazil as the presidential race heats up. we will discuss a big surprise come back. stay with us. ♪
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>> welcome back. you are watching "the pulse." interesting in brazil. one candidate jumped to second-place, edging out silva and forcing a runoff with the president. we knew there was going to be a runoff, but we did not expected to look like this. how do the fortunes change quite so quickly and what is the impact on to the second round? let's talk to the director of the brazil institute at king's
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college. how did he manage to pull that one off? >> it is a big surprise. we were talking about a different scenario in the second round. both candidates hit the president hard about contradictions in her profile. people have just wanted againsta useful vote the president. >> history dictates she is still likely to win in the second round, but the momentum is changing. >> the momentum is changing. marina's endorsement would give him another impetus. it has been a very unpredictable election up until now and many people are afraid to call this one in the second round. >> how does he play the second
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round? is it about change? makeed to move around and sure it happens? how does he communicate? i think he talks about change and he talks about the government from 1995-2002. he will say, we can manage the economy better than the president. the fiscal surpluses almost down to zero. inflation is too high. i can do a better job of managing the economy, would be his pitch. >> to the negative tactics carry on? i think there needs to be a bit of both. the president is going to be negative about the risk to voters. the higher unemployment and lower wages. she will try to say, i have reduced inequality and poverty and i am the best candidate to keep doing that. >> if she loses, how does business react? popping.seen stocks
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do we get a big investment surge? >> first, business will have a big party. there are a lot of structural problems in the brazilian economy than no president can solve overnight. a lot of the spending the federal government does is fixed to the margin in terms of maneuver. it is quite limited. they will look at what is really possible. quite limited options. how long does that party last? be a toughgoing to year for whichever of the candidates wins the presidency. >> in terms of dealing with macro economic issues. >> i think they are just
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appealing to different parts of the electorate. it is very divided. the lower down you go on the income sale, the more likely you would the voting for the president. you are worried about jobs and social programs. the higher up, the more likely you would want change and a move in an economically liberal direction. what kind of message does is send to the incumbent if it is tight? there is a big constituency that does want change. the real battleground is the southeast. especially the state of são paulo. also the voters living in households that are in between 1000 and 4000. how much will they aspire to better economic management? how much will they be worried about keeping their job, about social programs?
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that is the battleground. >> the expectation would still be, we are talking about the polling when you sat down in the break and your sense was that you have momentum going in to the first-round and the chances are you are going to carry that. >> i think she has a slight edge. a month ago, they were giving the slight edge to the opposition. thought ite, they was marina. the momentum could carry neves, . a lot of people think 12 years in power for the current government is too long. is the grandson of a famous politician. he is recognizable. he is not as much of an enigma as marina has been in the campaign. >> thank you very much indeed. >> thanks very much. >> joining us from king's
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college london. right, company news we have been talking about. a one billion euro refinancing plan. the means to invest in disneyland paris come which has seen lower themepark attendance. shares are down around 17% on the news. shares in anticipation of the upcoming ipo. -- they are seeking to sell at least 25% of the shoemaker. driving.nto automated new features that can help drive the car. responding to increases by audi and mercedes-benz. coming up, it is golden week.
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china's national holiday wraps up. we are looking at how one company is looking to cash in. ♪
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>> good morning. . tv -- we are live on bloomberg tv. it is a big week for the chinese. it is golden week. european business correspondent caroline hyde sees how one high-end restaurant chain is looking to profit from the big chinese vacation. delicate dim sum. noodles and dipping sauces. for the chinese, it is golden week. a chance to really treat yourself. first, i would like to introduce peking duck. london, chefs are working furiously to cater to
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chinese tastes and chinese cash. close to half a billion will leave home to make most of the national holiday, many from abroad. they spent 35% more on british businesses last year. it is a time to maximize profit. there is even a specially designed menu. >> set the price at 88 pounds per person. in chinese culture, we believe it is a lucky number. >> equally important, service. >> we have chinese peking duck. it will make them feel that this is a second home. >> at the end of the meal, you get this. a mecca run. 8 -- maccaroon. with champagne and it and popping candy.
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caroline hyde. >> there are a number of questions surrounding that. caroline hyde is in the studio to talk about her tasty assignment. we will have much more on what we should be watching for the rest of the day. why didn't you eat it? >> that was a replica version. i did eat everything else and it all tasted pretty delicious, particularly the caviar with duck. >> something to think about for next weekend. >> a tough life. all the chinese have gone home, we can go have dinner there. in terms of what we are looking forward to now, what is on the agenda? >> interesting today. $13 million.
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excess.lion in his net worth is more than his managing. redemptions last month were the worst month ever at pimco. the -- is it the team of one? i think it is the equivalent of his net value. this company compared to him. >> i could think of worse places. it is raining outside here in london. trip.talk about valls' is it going to be a soggy affair? >> he has plenty of friends here.
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fact that he is even think these counts of things tongue-in-cheek is going to the french government. the french government kicked back budget deficit targets. they are downgrading growth forecasts. they come to the city of london and say, we are credible. they need to convince a lot of people of that. a big worry for the french government is how convincing the city of london is it convincing the eu about the budget. you are not meeting eu rules. they are not going to hit it until at least 2017. >> the finance minister is within the european commission. >> we will see on that one. [laughter] the brits are bigger investors in france than they are in germany, which says a lot rid -- a lot.
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it is going to be an interesting day. the other big piece of news we are watching. francine lacqua's big return to the newsroom. >> big headline. >> big day. we will wrap the show up with a look at the currency markets. a little bit of a concern with regard to what is happening with the french budget and will that be kicked back to paris. a big drop we have seen in factory orders in germany. back to the story that germany may need to do more to stimulate its own economy. it is going to be an interesting week for euro-dollar. the other parent want to show you-- pair i want to show is the new head of the central
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bank in south africa. the bigger question i am fascinated to found out is why she is only going to go for one term. 15-year term and she will step down in november. kganyago is going to be stepping up. a big job. we have as higher and significant current account deficit in south africa. inflation is a significant problem. the to do list for this guy is massive. be alooks like it could very, very tough year. that is it for "the pulse." .e will be back tomorrow "surveillance" is coming up next live from new york with tom keene and the team. a bit of postgame analysis on the payroll numbers. they will talk about what is happening in brazil as well. that is the big story overnight, the change in the polling in brazil. fascinating. we will take a break.
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"surveillance" will continue. we will see you tomorrow. join the conversation. we will see you tomorrow. ♪ .
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of normalcy returns to hong kong. students and government leaders negotiate nonnegotiable terms. brazil's pro-business candidate
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-- she stuns and forces a runoff for president. -- now yes.o, no hewlett-packard is torn asunder by technological process. morning, everyone. this is "bloomberg surveillance ." it is monday, october 6. joining me, olivia sterns is here this morning. scarlet fu is off. adam johnson is with us as well. we already have a "surveillance" correction. >> it is understandable. she has been in power for 12 years. >> you have seen the stock market run-up in the past couple of weeks. this guy is -- >> senator nevis comes back with a big shocker.

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