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tv   Bloomberg Markets Balance of Power  Bloomberg  March 5, 2018 1:00pm-2:00pm EST

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. the top stories we're watching. trade wars within the republican party. paul ryan urges the president to tariffs.r president trump says he is not backing down. the israeli prime minister visits the white house after president trump recognizes the embassy in jerusalem. he is facing potential criminal charges back on. the national people's congress may compile an economic team to the president xi deliver on what he has promised. ♪ shery: president trump, not backing down on his america first trade agenda. during a meeting with israeli prime minister netanyahu moments president admitted
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blowback with trade partners and congressional public ends. he would taxters automotive imports and there would be a possible trade war. our correspondent michael mckee is in mexico city. the nafta deal was not easy at all. president trump's comments are not making it easier. chael: they are not. canada and mexico are the biggest importers of steel in the united states. both have threatened to retaliate with the president signs the tariff order. we are waiting to hear about what has been discussed in the bilateral meetings. they will be speaking to the press and the couple of hours.
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of hours.uple more tweets from donald trump saying he is going to continue with the canada and mexico sanctions unless a new deal is reached on nafta. at least he wants to continue negotiating. but this undercuts the idea that this is a national security issue. it has to do with traded deficits. .ot a security matter donald trump isolated himself. i find paul ryan's reaction interesting. a sectionrepresents of milwaukee that makes harley-davidson motorcycles. shery: president trump is leaking the turks with the iffsonal -- linking the tar with the nafta agreement and the otherng of a while and issues on immigration. however the countries planning to react to all of this -- how
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are the countries planning to react to all of this? --'co: michael: they have been trying to find a way to make this work. there are 30 chapters in this nafta agreement. they think they can get something done this year if they keep going, but they don't know what the president exactly wants. ,hings like, automotive content and the suspension of nafta, there has been no progress made. the president is going to have to negotiate if you want to get something done. -- if he wants to get something done. talked to president negotiators a few months ago. is there any chance he is crazy can throw, that he
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these extra things into the mix and actually make progress? michael: the president's comments were directly contradicted by the economic tweeted of mexico, who shortly after the president this morning that this is not the way to incentivize anyone to talk about nafta. mexicans arethe counterng to drop sanctions. it doesn't up the has convinced any side of anything -- drop counter sanctions. -- draw counter sanctions. it doesn't appear he has been convincing any side of anything. there are major negotiations expected to place, especially on the auto question. meeting, theil
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mexicans will look for a new president. we have the midterm elections in november. negotiations could be suspended and taken up again in the fall. international economics and politics correspondent, michael mckee reporting from mexico city. let's get a check on the markets with abigail doolittle. abigail: stocks are in rally mode. 500, all up.&p this is a significant reversal of what we had earlier today, with declines of more than half a percent. we will see this reversal. this is after big declines last week. midmorning, taking a leg higher. you mentioned those tweets from president trump.
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he said he is not going to let up on mexico and canada, unless nafta's plan is changed. there are changes agreeable to the united states. perhaps there is some wiggle room. fulltraders are saying a out trade war will not happen. take a look at the imap. all 11 s&p 500 index sectors are higher. real estate and utilities are up top, interesting because those are the rate is sensitive sectors. thestors are hitting up all sectors. financials are also right up near the top, benefiting from yields trading higher. we are looking at stocks roughly higher. some of the biggest movers for the s&p 500, xl capital, up nearly 29%. axe is buying them for $52
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$52 billion.k -- this insurance company is trading higher. this fertilizer company of about 6.6%. on the strength of south american crops. block, upach and our &r block is up- h more than 4%, upgraded to a buy. shery: thank you. coming up, the israeli prime minister comes to washington as trouble at home intensifies. what is to expect on the agenda for a meeting with president trump. talk with former senator joe lieberman, next. this is bloomberg. ♪
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shery: this is "bloomberg markets: balance of power." david: let's go to mark crumpton. k: paul ryan rejected the president's plan for tariffs on steel in aluminum. a spokeswoman for the speaker says they are extremely worried about the consequences of a trade war and are urging the white house to not advance with
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this plan. british prime minister theresa may says it she is confident as an agreement with the european union about the u.k. brexit plan. she made her remarks to my present parliament today. we are close to giving citizens and businesses on both sides time to prepare for our new relationship. mark: prime minister may has spoken with president trump and concern- expressed about the trade war with the european union. with thessed the issue president during a phone call on sunday. kim jong-un held talks with top aides to the south korean president today in the first meeting between officials from seoul since kim jong-un to power in 2011. the south korean advisors are
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trying to persuade him to begin talks with the u.s. on the nuclear weapons program. at cosby is trying to stop dozens of his accusers from testifying at his sexual assault retrial . -- next month. as many as 19 women may be alled to the stand to show 2004 assault was part of a five-decade pattern. his trial last year ended in deadlock. global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. the israeli prime minister has been at the white house meeting with president trump this afternoon, with iran, syria, and the move of the u.s. embassy on the agenda. we welcome former senator joe lieberman. welcome.
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it seems to me that president trump and you have an agreement when it comes to --prime minister netanyahu have an agreement when it comes to iran. how can they advance the ball today? i think this will be the most important topic they discuss, even though there other other important topics in the air. iran is the most threatening to israel and the united states. is onk the focus here increased economic sanctions, on violations ofthe nonnuclear principles that they
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commit every day. home,rights violations at they squeeze them economically to come back to the table to see if they can renegotiate. david: won't they be preaching to the choir to one another? joe: they would. agree thatprobably if they don't get agreement from the europeans that it is better to walk away from the existing agreement with the economic power that america has seen. an important thing is a bipartisan majority also agree with president trump and prime minister netanyahu on this one, which is that iran is the biggest threat to our security. it is about the u.s.-israel unusual because it
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retains bipartisan support in congress in a very partisan era. shery: how important is it for israel and the united states to syria? iran in joe: it is important. it is late in the game, but not too late. the world allowed iran and russia to come into the vacuum that was created. when the people of syria rose up, president assad murdered his own people. and europeanstes step into that vacuum -- stepped into that vacuum. iran put tens of thousands of troops on the ground and members of hezbollah. israelis are beginning to feel
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withiran is moving closer these troops to the northern border of israel. the israeli prime minister has made it clear he will not use his military power to strike iranian targets in syria if he believes they threaten is really security. -- israeli security. the u.s. will probably support him. response will determine our reaction. another subject that will likely come up his negotiations with the palestinians. you have weakness on both sides. prime minister netanyahu has problems at home. kushner ine mr. charge of that for the president. is there any progress going to
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be made in syria -- in this a rea? breakthroughs toward peace at this time are slim, not because of any questions about kushner or prime minister netanyahu in israel. there is not a will to achieve peace, particularly on the palestinian side. can getnd pray we herself sooner rather than later solution totate achieve peace. shery: president trump says they are working hard on the peace plan. he said at the embassy moved to jerusalem has come 20 years too late.
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how will the peace process happen if no official wants to talk about it? i know the palestinian leadership. there are domestic political reasons among the palestinian people. israel is the only country in the world where the united states does not put its embassy in the city because country says is its capital. is that we areg going to put the embassy in a part of western rosalynn no one thinks will be the subject of -- westerns jerusalem know when things will be the subject of negotiations in a genuine crisis -- no one thinks will be the subject of negotiations in a genuine
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crisis. palestinians realize they have a real opportunity. president trump has surprised me and a lot of others during his presidency. maybe he will come forward with a middle eastern peace plan. it would be a surprise. two-state solution has been u.s. policy for some time. are you convinced that president trump is committed to the solution? people close to him say he is past that. joe: i am not that close to the president. i know him. it has been american policy. lets me put it another way. there is not a another solution. peoples and conflicts, you are trying to resolve it -- in
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nflict, you are trying to resolve it, you have to give each party what they want, sovereignty, security, and peace. you have to make peace with your opponent. that is the israelis and palestinians in this case, hopefully sitting down and being everyone knows what the courses. -- what the course is. the question is whether leaders on both sides have the courage to take the risk. shery: thank you so much for your time. former senator joe lieberman from connecticut. will head towe rome for the latest on the italian elections as the former leader of the democratic party resigns. let's get a check of the major
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averages. are seeing in u.s. stocks accelerating in the afternoon session, with the dow gaining more than 1%. the s&p 500 is up. estate and utilities are leading the financials are gaining ground as we see yields rising. the nasdaq is up 1%. live from new york this is bloomberg. ♪
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david: this is "bloomberg markets: balance of power." shery: the former italian a -- the democratic party leader in italy has announced his resignation. we heard mateo thing it was
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obvious-- saying it was he would leave the democratic party leadership. a headachre for italy. >> yes, a massive headache today. the president needs to pick the next time minister -- prime minister. has the leader of the five star party movement as one choice, who he never thought would be in this position. matteo was the youngest prime minister in italy's history. he has resigned. party got under 20% of the votes. under their rules, he has to leave and pick a new party leader. they are out of government. we will see someone from one of establishment parties
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possibly come to power. david: does the president have any choice to turn the 5 star over? they got more votes. where else could he go? annmarie: he can look to salvini, which would be a headache for him. the 5 star movement is out in the lead. the votes are still being counted. could create a center-right coalition. that is likely where matarella would have to look in order to restore power. if no deals are able to happen, it will be a hung parliament. we could see elections again. business community are
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saying this would be the worst case scenario. team,star and salvini's teaming up together. this would be an anti-e.u. party. both are saying they have the right to form a coalition, but you never know what happens after these boats get tallied. some are saying we could potentially see that and that would be anti-european and negative for the business community. david: thank you so much. legislaturena's opens an annual session today. we will talk with an associate at the china center.
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david: this is "bloomberg markets: balance of power." shery: let's get a quick check of the major averages. u.s. stocks are rebounding more
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than 250 points. we continue to see gains in the afternoon session, with the s&p 500 gaining more than 1%. the financials are also gaining ground as we see yields rising. the dow is turning positive for the year after falling. bloomberg's turn to first word headlines with mark crumpton. stepped updent trump his campaign or to impose tariffs on imported steel and aluminum today. he said canada and mexico will be subject to the tariffs unless a new nafta agreement is signed. he said that nafta has been a bad deal for the united states. the ambassador to italy appeared
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commentingg today, on the prominence of new parties and the election. the outcome here to a large extent is that there is a president in italian office who inl likely have a strong say the outcome. mark: italian voters punished mainstream parties this week four years of economic decline. italian prime minister resigned today as leader of the democratic party, following its defeat in the weekend vote. the german chancellor's real work starts now, after more than five months of political stalemate. the social democratic party has agreed to join angela merkel for another coalition government.
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a stronges -- says voice is needed to face the issues of the new government. the trial for the most senior vatican official ever charged in the sex abuse crisis began in court today. a 76-year-old is accused of abusing multiple people decades ago. he served as the finance member -- finance minister to poke brent -- two pope francis. he denies all of the accusations. global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. the annual session of the national people's congress in china has begun, with constitutional changes to allow president g -- president xi tuesday passed his second term.
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-- to stay past his second term. george, welcome. talkt to start with this about the suspension of the term of -- term limits of president xi. everyone says it will be put into the constitution. is that important beyond the symbolism? i don't think it is as great of a change the western media has made it out to be. the presidential power derives from president of the central party. limits, don't have term so they can do that for a long time.
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the abandonment of these term that were introduced a more collective style of that isce in china, able to move that says a lot about him, about the president. arounds to be a round -- to steer china through to the middle of the century, to economic and political wondrous things he wants to achieve for china. it is a big deal, even though it is not necessarily a power grab. he wants his own team around him to help him with that process. senior economic advisers may be promoted to the vice premier position. how does that affect policy going forward? we know the members of
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the most senior cabinet institution in china. there are big questions hanging and the headicial, of the anticorruption campaign, who was widely photographed sitting with other standing committee members at the national people's congress. both of these gentlemen have big jobs, that it is not clear yet what they will be. yet what is not clear they will be. will they be head of the central bank, economic affairs? it is not clear what they could end up doing. the chart.s look at chemchina achieve its growth also achieve china
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its growth target while cutting its deficit target? george: unlike the united states or in the western world, our gdp is the result of what happens to lots of different decisions, companies and governments and what everyone else makes in china. everyone has to work to try into even -- totarget, try and meet that target, even if it means incurring lots of debt. and's what happened in 2010 2011. the idea that you could have high growth in falling debt, i don't think that will happen. since the national people's congress also announced the new growth target of around 6.5% for the coming year, china
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is still addicted to growth targets. debt will continue to rise to quickly. -- too quickly. we continue to hear from chinese policymakers they want to curb financial risk. what does that mean for other countries that are dependent on china? george: george: this is one of the many of the little things -- ambivalent things about china. the leadership is quite serious about coming egregious forms of risk taking it financial behavior. -- and financial behavior. they has been sitting on shadow banking for over a year and succeeded on curbing bad practices. at some point, if you carry on set onis, if they are inflicting financial stress and pain of the financial sector --
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on the financial sector, there will be a cost to growth. i don't think they will be willing to pay it. they want that growth of 6.5%. the inclination to prioritize growth will win through. shery: stick around, george. the chinaate of centre will be sticking around. and we will talk about a possible brewing trade war. this is bloomberg. ♪
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david: this is "bloomberg markets: balance of power." shery: we're back now with
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associate with the china centre. are you factoring in a potential trade war? so, is that risk the real in china's growth targets -- de railing china's growth targets? george: i am not sure. it feels like we will have to wing it on the basis of what ever the tweet is from the white house. it is a dangerous course of action when you announce unilateral trade tariffs, as the president has just done on steel and aluminum. it is dangerous when you do that in a generic sense. in many ways, these imports from china are very small.
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the major exporters to the united states of steel and aluminum are canada, mexico, brazil and south korea. china has been in washington for the last few days, trying to negotiate and talk with the united states government about trade. we don't really know what transpired. evidently, not very much. it is a big problem. china is kind of biting its time at the moment. -- biding its time at the moment. president or the united states government were to push this to the point where china felt humiliated or offended, they might do so directly or go to the world trade organization
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and appeal for allies to help them. it is worrisome. these things can get out of hand. shery: china is considering a wouldn't sorghum, but that affect their own economy, especially when it comes to agricultural products and pricing prices -- rising prices? george: there has been little bits of trade noise, trade friction in the united states and china. has taken action against u.s. agricultural exports, not really beyond that. themn't surprising to see looking at agricultural exports from the united states and china. if things got really bad, they might take action against individual sectors or companies that do a lot of business in china. beoing, for example -- boeing
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for example, they can source aircraft elsewhere. a lot of people are critical about what is going on in china, including myself. they are trying to play the good cop, not trying to overreact. the boulevard a certain amount of grief in terms of trade -- they will absorb a certain amount of grief in terms of trade, that every country has its limits. david: you made a very important point. this will hurt canada, europe, brazil, a lot more than it will hurt china. can say, if the united states want to go to a trade war with its allies, we will stay out of it and benefit in the end. right, in thes
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thee that so far announcements from the white house aren't going to hit china very much. less than 1% of american steel imports come from china. some big imports come from vietnam because of chinese investments in vietnam, but it is still less than 2.5% of total imports. the chinese will not be hurt by these measures. they can show they are offended, that they don't like what is going on, but i think they will be cool for the time being. it depends on how far the white house wants to take this. i think there will be a point when they will take more assertive action. everyone loses in a trade war. the president is 100% wrong about that. the chinese lose more than the americans do because china runs
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a surplus and surplus countries will lose more than deficit countries. david: thank you for being with us, george. it is time now for the stock of the hour. shares of cf industries are rising after our analyst upgraded it, which should lead to rising prices for fertilizer. joining us now is taylor riggs. i am not familiar. taylor: this comes down to supply and demand. there was a weather disruption in brazil and argentina that disrupted the crop. prices are being raised for corn. we have a chart showing that -- showing crop had its biggest gain in 29 months in brazil in february -- corn had its biggest gain in 29
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months in brazil in february. there is a broad-based rally across the screen. there is a price target of $3.75, a bigger came here across multiple companies. shery: earnings were reported a few weeks ago. do we see this reflected in their earnings? george: -- taylor: not quite. we are seeing the net debt on the bottom. that is what is concerning. debt is rising to its highest level, near all-time highs. flowwe have is free cash -- free cash flow on the top. there were 13 straight quarters as negative cash flow. very concerning.
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haven't quite seen that come into the stock yet. shery: thank you, taylor. up, paul ryan is the latest republican to urge president trump not to move forward on plans to put tariffs on steel and aluminum. we will explore whether these tariffs could cost the gop control of congress. this is boomer. ♪
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shery: this is "bloomberg markets: balance of power." trump'sresident reaction on trade tariffs has , much of ittion from his fellow republicans. thank you for being with us, david.
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there was a statement today. trump not toident impose tariffs are trying to undo the historical economic growth the tax cuts and the presidents agenda have unleashed." we have celebrated what president has accomplished with these tax cuts. we are seeing the impact. we are seeing the economy is coming back and growing. the reason we are opposed to the tariffs would essentially undo a lot of the benefits of economic growth, people will have to pay more for a lot of god's. -- a lot of goods.
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the president is looking at this as part of a campaign promise. i am hoping he will think of this is not a specific promise to put tariffs on. that is bad policy, which ends up being bad politics. i am hoping he will look at this as part of a larger promise to bring jobs back to america. he was on a good path of renegotiating some of these trade deals that could lead to more trade and more prosperity and a better deal. but this terrorist could spiral into a worldwide depression. could spiral into a worldwide depression. he got bad advice from his trade team. david: he has been pretty consistent on this, specifically focusing on the trade deficit. he is focusing on the wrong deficit. say he should be focused on the fiscal deficit.
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congress has started spending like drunken sailors again. others have told them over and the again, when you count services and the capital trade that goes back and forth, america is waiting on a one of these trade deals. thesening on a lot of trade deals. when we get haircuts, we give our barber money and don't give anything back. we do that because we like the service our barber provides. we are not selling other countries goods, but we are selling them banking and other services. america is making a lot of money. shery: paul ryan is very much against the tariffs. this is what he said today.
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are you hoping there could be something coming from congress that could help mitigate the impact of these tariffs? i would urge the president to say, these tariffs ought to go into place. congress is supposed to vote on whether we raise taxes or not. i hope we send it over there for a vote. speaker's statement has led our allies know this is not a unified front. i am sure there are a lot of democrats in the midwest saying, we don't want to lose our agriculture experts. -- exports.
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shery: president trump is linking a fair nafta deal with the tariffs. how do you feel about president trump linking these issues, into immigration as well -- and to immigration as well? david: i think nafta can be improved. i have encouraged the administration to work on renegotiating those deals. saying, i am like going to put a 25% tariffs on seteel, of canada does more that i like. people don't negotiate with tariffs, the retaliate. -- they retaliate. we would get more done with a little more honey into less vinegar. than you -- thank you so
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very much, the president of the club for growth, david mcintosh. being -- we may be seeing the wrapup of the nafta deal in the seventh round as it wraps up on monday. go to to get the latest on global politics in your inbox every day. next, theing up author of "lacks one -- "black swan." mom you called?
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it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. scarlet: it is 2:00 p.m. in new york. julia: welcome to bloomberg markets. ♪
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scarlet: we are live from bloomberg headquarters in new york and here are the top stories we are covering. president trump plan to impose tariffs is overshadowing talks on nafta. gridlock as fodor's mainstream and antiestablishment mainstream voters antiestablishment party. and without markets closing in two hours time and we have where stocks are trading with abigail doolittle. we are in rally mode and we are looking at volatility. around the time of the open this morning after the first


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