Report
Dave Nicoski ...
  • Ross LaDuke
EUR 229.88 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Global Equities Stumbling Again

We continue to believe global equities (ACWI-US) are likely to test the recent low made on March 23, with an undercut of roughly 10% also in the cards. This expectation is supported by price action during prior major waterfall declines in past recessionary periods. It is also worth noting that 15-25% rallies are to be expected within bear markets -- potentially multiple. During 2001-2002 the S&P 500 had two 20-25% rallies, and both ended up failing and breaking to new lows. During 2008-2009, there were four declines, each ranging from 16-25% in the S&P 500, and all four ended up breaking to new lows. With the S&P 500 and MSCI ACWI ex-US (ACWX-US) stalling at logical resistance that we highlighted over the past week, it is possible that their descent toward the March 23 lows has already begun.

· MSCI ACWI ex-US (ACWX-US). In our March 26 Int'l Compass we noted an important initial low had been established, but to watch for resistance at $38.30 or $39.80 considering our expectation for a test of the lows (not to mention the potential for an undercut of the lows). Thus far the ACWX ETF tried and failed to get above $38.30. We will continue to watch for resistance in the $38.30-38.50 range moving forward, however this failure at resistance and the recent loss of upside momentum could be signaling lower prices in the near-term. Moving forward there is potential for support in the $35.10-35.75 range, but a failure to hold that level would likely mean a visit to the March lows of $32.30... see chart below.

· Index Overviews. Emerging markets, and specifically China (MSCI China, Shanghai Comp.), continues to have significant representation in terms of our individual stock recommendations. Within Japan (TOPX) and Europe (STOXX Europe 50) we would continue to favor large-caps over small-caps... see pages 2-3.

· Global Discretionary vs. Staples Ratio. This measure of risk appetites has failed at major resistance, a sign that global equities could be headed back toward the recent lows. As we highlighted last week, major equity bottoms are often characterized by this ratio testing the lows multiple times or undercutting the lows, something we believe is likely to happen again in 2020... see page 3.

· Actionable Themes: Staples, Health Care, Technology, Additional Bottom-Up Ideas. With the global economy likely headed for a recession (or worse) we believe it is important to stay with the Sectors that have been outperforming amid the COVID-19 pandemic as we believe they are likely to continue outperforming. That means we are sticking primarily with Staples, Health Care, and Technology. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.
Underlyings
Abdullah Al Othaim Markets Co.

Abdullah Al Othaim Markets CompanySJSC Formerly known as Abdullah Al-Othaim Markets Company. Abdullah Al-Othaim Markets Company SJSC is a Saudi Arabia-based joint stock company engaged in the retail and wholesale trade of food stuff, in addition to constructing commercial malls and investing in their sales or leases. The Company undertakes wholesale trading in food supplies, fish, meat, cars and its spare parts, agricultural crops and livestock, and household equipment; constructing, managing, operating and maintaining of super markets, malls, and storage and cooling warehouses; cooked and non-cooked catering services; computer services, and operating and maintaining electrical and mechanical equipment. During the year 2011, the Company operated seven hypermarkets, 65 supermarkets, eight wholesale outlets and 26 corners.

Ausnutria Dairy Corp Ltd

Ausnutria Dairy Corporation is a holding company. Through its subsidiaries, Co. is engaged in the production, research and development, milk collection, processing, marketing and sales of paediatric nutrition and dairy products in the People's Republic of China (the "PRC"), the Netherlands and other overseas countries. Co. operates in two segments; the Ausnutria segment comprises the manufacture and sale of own-branded paediatric cow milk formula products in the PRC, while the Ausnutria Hyproca segment comprises the manufacture and sale of dairy products in the Netherlands as well as the sale of its own-branded products in the PRC and other overseas countries.

Azuma House

Azuma House Co Ltd. AZUMA HOUSE Co., Ltd. is a real estate company. The Company operates in four business segments. The Real Estate and Construction segment is engaged in sale of land, condominiums, house for sale, sold house, ordered construction, as well as renovation work and real estate brokerage business. The Real Estate Rental segment is engaged in management of real estate rental, real estate intermediation, as well as management of elderly house with services. The Land Utilization segment is engaged in sale of rental house of asset management proposal type and rental house for sale. The Hotel segment operates hotel business and restaurant business.

Beijing Sanyuan Foods Co. Ltd.

Beijing Sanyuan Foods is engaged in the process and sale of dairy products, beverages, foods, raw materials, health foods, and cold food and drink; the manufacture of dairy product and food machineries; the development and manufacture of bio-engineering technology products; the provision of consultation services, accommodation, dining, cold-storage and transportation of self-produced products; and the sale of self-produced products. Co.'s products include house shape fresh milk series, UHT sterilized milk series, yogurt series, bag fresh milk series, milk powder series, Beijing Cheese, various dairy drinks, cold food, palace dairy products.

Beijing Shunxin Agriculture Co. Ltd. Class A

Beijing Shunxin Agriculture is engaged in the production and sale of spirits; processing and sale of meat product; production and sale of fruits and vegetables juices; seed breeding; provision of agricultural technology services; breeding swine; sale of vegetables and fruits; processing agricultural by-product; logistics operation; marketing management; water and construction engineering; real estate development; cultivation and sale of high-grade flowers. Through its subsidiaries, Co. is also engaged in the provision of commercial information and flower warehouse services; and processing and making paper products.

BIONEUTRA GLOB/d

BMO Asia USD Investment Grade Bond ETF

C&S Paper Co. Ltd. Class A

C&S Paper Co.,Ltd is a China-based company principally engaged in the production, processing and sales of household paper products. The Company's main products include roll paper and non-roll paper tissue products. The Company owns brand names of C&S and Sun. The Company distributes its products in the domestic market.

Capcom Co. Ltd.

Capcom is engaged in the development, manufacture and sales of video games, online games, mobile games and arcade games, as well as the operation of amusement arcades. Co.'s business segments are digital contents, amusement facility and amusement equipment. Co. is engaged in the planning, development, manufacture and sales of home video games, online games and mobile games including "Rockman," "Monster Hunter World" and "Dragons Dogma"; the operation of "Plaza Capcom" amusement facilities in Japan; and the development, production and distribution of arcade games for amusement facilities. Co. is also engaged in the licensing business of game characters and the real estate leasing business.

Celltrion Inc.

Celltrion is engaged in the manufacturing of chemicals for printed circuit board. Co.'s products include plated through hole chemicals, electromagnetic interference chemicals, and macro-Etchant.

Chengdu Hongqi Chain (A)

Chengdu Hongqi Chain Co., Ltd. is a China-based company principally engaged in the operation of regular chain supermarkets. The Company mainly provides daily-used products, cigarettes, wines, food, grains, oil, beverages, clothing, shoes, hats and textiles and others. The Company also provides autobus card recharging service, ticket consignment service, payment of telecommunication and natural gas fee, as well as electronic payment service. The Company conducts its businesses mainly in Sichuan Province, China.

Chongqing Pharscin Pharmaceutical (A)

Chorus Limited

Chorus Limited (Chorus) is a telecommunications infrastructure company. The Company maintains and builds a network made up of local telephone exchanges, cabinets, and copper and fiber cables. The Company's product portfolio encompasses a range of wholesale broadband, data and voice services across a mix of regulated, contracted, and commercial products. Its products include fiber broadband, fiber premium, copper-based voice, data services over copper and copper-based broadband. Its fiber and copper connections provide access to the Chorus fixed lines network to enable connections to the Internet. Its infrastructure includes the physical storage and site-sharing rental services for the co-location of the third party or shared assets. The Company's field services include services in the field to protect, strengthen, and increase the available network.

COSMOS Pharmaceutical Corporation

Cosmos Pharmaceutical is engaged in the operation of a chain of drug stores "Discount Drug Cosmos." Co. maintains 827 stores in Kansai, Chugoku, Shikoku and Kyushu regions as of May 31 2017. Co.'s principal products are medicine, oral care products, nursing care products, dietary supplements, nutritional food products, cosmetics, hair care products, bath and body products, baby products, detergent, insecticides, toiletries, gardening products, automobile accessories, clothing, processed food products, dairy food products, snacks, non-alcohol and alcohol beverages, and cigarettes.

DaShenLin Pharmaceutical Group Co. Ltd. Class A

Dashenlin Pharmaceutical Group Co Ltd. DaShenLin Pharmaceutical Group Co., Ltd. is a China-based company principally engaged in the pharmaceutical retailing business. The Company's primary business includes direct sales and retailing of Chinese and Western medicine, ginseng nourishing herbs and Chinese medicine pieces, health products, medical apparatus and instruments and other commodities. The Company mainly conducts its business within domestic market.

Dr. Reddy's Laboratories Ltd.

Dr. Reddy's Laboratories is an integrated global pharmaceutical company committed to providing affordable and innovative medicines. Co. derives its revenues from the sale of finished dosage forms, active pharmaceutical ingredients and intermediates, development and manufacturing services provided to innovator pharmaceutical and biotechnology companies, and license fees from marketing authorizations for its products. Co.'s principal areas of operation are in global generics, pharmaceutical services and active ingredients, and proprietary products.

Foshan Haitian Flavouring & Food Co. Ltd. Class A

Foshan Haitian Flavouring and Food Company Ltd. is a China-based company, principally engaged in the manufacture and distribution of seasonings. The Company's products portfolio consists of soybean sauces, general sauces, oyster sauces, chicken essence seasonings, vinegar and others, with soybean sauces, general sauces and oyster sauces as its main products. Its general sauces are applied in barbecue sauces, hot pot sauces and others. Its oyster sauces are applied in cooking, salad dressings and others. The Company conducts its businesses mainly within domestic markets.

Hikma Pharmaceuticals Plc

Hikma Pharmaceuticals is a pharmaceutical company engaged in developing, manufacturing, and marketing a range of branded and non-branded generic pharmaceutical products across the U.S., the Middle East and North Africa, and Europe. Co.'s business segments are: Injectables, which sells specialized generic injectable products, including sterile liquid, powder, lyophilized and cytotoxic products; Generics, which sells non-injectable generic products that include amoxicillin, buprenorphine, butalbital, acetaminophen and caffeine, colchicine, and fluticasone; and Branded products, which sells branded generics and in-licensed products including Amoclan®, Blopress®, Omnicef®, Prograf® and Suprax®.

Hindustan Unilever Limited

Hindustan Unilever is predominantly engaged in manufacturing and distributing consumer products mainly in India. Co. operates five main business segments: Soaps and Detergents include soaps, detergent bars, detergent powders, detergent liquids, scourers, etc.; Personal Products include products in the categories of Oral Care, Skin Care (excluding soaps), Hair Care, Deodorants,Talcum Powder, Colour Cosmetics, Ayush services; Beverages include tea and coffee; Package Foods include Branded Staples (Atta, Salt, Bread, etc.), Culinary Products (tomato based products, fruit based products, soups, etc.) and Frozen desserts; Others include Exports, Chemicals, Water business, Infant Care Products.

Hope Education Group (P Chip)

Hope Education Group Co Ltd. HOPE EDUCATION GROUP CO., LTD is an investment holding company which mainly provides higher education services. The Company with its subsidiaries operates schools and colleges in mainland China and charges tuition and boarding fees. The main schools and colleges operated by the Company include Southwest Jiaotong University Hope College, Jinci College of Shanxi Medical University, Sichuan Tianyi College, Business College of Guizhou University of Finance and Economics, Guizhou Vocational Institute of Technology and others.

Jafron Biomedical Co. Ltd. Class A

Jafron Biomedical Co.,Ltd. is a China-based company principally engaged in the research, design, manufacture and distribute of biological materials and medical equipment. The Company's products include disposable hemoperfusion devices, hemoperfusion machine, disposable bilirubin adsorbers, DX-10 blood purification machine, suture needle, as well as resins bandage, among others. The Company's products are applied in uremia, poisoning, severe liver diseases, autoimmune diseases, as well as multisystem organ failure, among others. The Company's products are applied in 31 provinces, more than 3000 hospitals in China.

Jiangsu Yangnong Chemical Co. Ltd. Class A

Jiangsu Yangnong Chemical is engaged in the manufacture, process, and sale of synthetic pyrethroids products and other fine chemicals products used in agricultural and public health sectors. Through its subsidiary, Co. is also engaged in manufacture, processing, sale and application services of pesticide and midbody; technology development; import and export of technology; and act as an agent for different kind of commodity goods . Co. has two main business segments which compriesd of methrin for public health use and methrin for agricultural use.

Jonjee Hi-Tech Industrial and Commercial Holding Co. Ltd. Class A

Jonjee Hi-Tech Industrial & Commercial Holding is engaged in urban infrastructure investment; property management; secondary water supply; hi-technology industry investment and development; industrial investment; equipment leasing; provision of technology and communication consultation services; and sale of industrial materials, general merchandises, hardware, electrical appliances; chemical products, needles, textile products and construction materials. Through its subsidiaries, Co. is also engaged in production of sauce, flavoring, non-alcoholic beverage, and automobile and motorcycle accessories.

Kobe Bussan Co. Ltd.

Kobe Bussan is a supermarket operator. Along with its affiliates, Co. operates in four business segments. Business Supermarket segment is engaged in the production, wholesale and retail of food products targeted at business users, offering products from other manufacturers, as well as products produced in the factories owned by Co. and manufacturers in collaboration with Co. Kobe Cook segment offers cooked food products. Cook Inoventure segment is engaged in the restaurant and education businesses. Eco-Regenerated Energy segment operates solar power plants and sells renewable energy to electric power companies. As of Oct 31 2017, Co. operates 780 business supermarkets throughout Japan.

Life

Life is mainly engaged in the general retail business. Co. operates retail chain stores named "Life" in Tokyo metropolitan area and Kinki area. As of Feb 28 2017, Co. maintains 264 stores. Co. offers foods, clothing, accessories, shoes, cosmetics, toys, books, stationery, beddings, interior goods and other daily use merchandise. In addition, Co., through its group companies, is engaged in the provision of credit card/electronic money service, casualty insurance agency services and training services for retailing business, as well as the manufacture and sale of food products, and the provision of transportation services.

Luxi Chemical Group Co. Ltd. Class A

Shandong Luxi Chemical is engaged in the production and sale of chemical fertilizers and the import and export of goods. Through its subsidiaries, Co. is also engaged in the manufacture of urea, sulfuric acid, ammonium phosphate, benzyl chloride caustic soda and other compound fertilizer. Co.'s principal products include carbamide, compound fertilizer, mixed compound fertilizer, ammonium bicarbonate, urea, diammonium phosphate, ammonium acid carbonate, caustic soda, liquid chlorine, benzyl chloride, chlorinated rubber, industrial hydrochloric acid and sulphuric acid.

MIPS AB

Mips Ab. Mips AB is a Sweden-based company, which specializes in helmet safety and brain protection. The Company offers its MIPS Brain Protection System (BPS) that implies solutions protecting against rotational motion transferred to the brain from angled impacts to the head. BPS is designed to add protection in helmets due to the low friction layer, which enables a relative movement between the head and the helmet, mimicking the brain's own protection system. The technology implements into bicycle, snow, motorcycle and equestrian helmets. More than 40 helmet brands use BPS, including Bell, Fox Head, Giro, Scott, Smith and Trek, among others. The Company determines only one segment as operations solely comprise sales of the component kit included in consumer products.

Nanjing King-friend Biochemical Pharmaceutical Co. Ltd. Class A

Nanjing King-Friend Biochemical Pharmaceutical Co., Ltd. is a China-based company principally engaged in the research and development, production and sales of heparin-related products. The Company's main products include standard heparin raw materials, low molecular weight heparin raw materials and their preparations, such as heparin sodium raw materials, heparin sodium, enoxaparin sodium injection, dalteparin sodium injection and Naqu Heparin Calcium Injection. The Company mainly exports its products to the United States and European countries.

Nestle India Ltd.

Nestle India is engaged in the food business. Co.'s product groups are: milk products and nutrition; beverages; prepared dishes and cooking aids and chocolates and confectionery. Co.'s milk products and nutrition include: NESTLE a+ Milk, NESTLE Slim Milk, NESTLE a+ Dahi, NESTLE Slim Dahi and MILKMAID Sweetened Condensed Milk. Co.'s beverages include: NESCAFE, NESCAFE SUNRISE and NESTEA. Co.'s prepared dishes and cooking aids include: MAGGI Noodles, Veg Atta Noodles, Multigrainz Noodles and 2-Minute Noodles, MAGGI HUNGROOO, MAGGI Magical Masala Noodles, MAGGI Masala-ae-Magic spice mix and MAGGI Soups.Co.'s chocolates and confectionary include: Nestle KITKAT, NESTLE MUNCH and Nestle MILKYBAR.

Nextdc Limited

NEXTDC is engaged in the development and operation of independent data centres in Australia. Co. has identified five reportable segments, being each state where Co. operates data centre facilities: Queensland, Victoria, New South Wales, Western Australia, and Australian Capital Territory.

Nikkei225 Bull 2x ETF

Nintendo Co. Ltd.

Nintendo is mainly engaged in the development, manufacture, and sale of home-use game hardware/software and peripheral equipment as well as software under the name of "Nintendo DS," "Nintendo 3DS," "Game Boy," "Nintendo 64,"" Game Boy Advance," "Wii," "Nintendo GameCube," "Game Boy Color" and "e-Reader (trading card games)." Co.'s principal software trademarks include "Pokemon," "Super Mario Bros.," "The Legend of Zelda," "STARFOX64" and others. Co. also provides online games and repair services. In addition, Co. is involved in the manufacture and sale of Japanese playing cards called "Karuta," playing cards and board games, as well as the management of intellectual property rights.

Ovctek China Inc. Class A

OVCTEK CHINA INC. is a China-based company principally engaged in the research and development, production and sales of eye-sight products and the provision of eye-sight services. The Company's main business is non-surgical vision correction. The Company's main products include orthokeratology, general contact lens and care products. Its core product is Dream David orthokeratology. In addition, The Company is also engaged in general glass frame sales business. The Company mainly operates its business in the domestic market.

Proya Cosmetics (A)

PT Sawit Sumbermas Sarana Tbk

PT Sawit Sumbermas Sarana Tbk. PT Sawit Sumbermas Sarana Tbk is an Indonesia-based company engaged in palm industry. Its business activities include managing palm plantations as well as operating palm oil mills and palm kernel processing plant. The Company's palm plantations, mills and plants are located in Kalimantan Tengah, Indonesia. Its products include crude palm oil, palm kernels and palm kernel oil. Some of its subsidiaries are PT Kalimantan Sawit Abadi, PT Mitra Mendawai Sejati, PT Sawit Lestari and PT Ahmad Saleh.

Shanghai Bairun Investment Holding Group Co. Ltd. Class A

SHANGHAI BAIRUN INVESTMENT HOLDING GROUP CO., LTD., formerly SHANGHAI BAIRUN FLAVOR & FRAGRANCE CO., LTD., is a China-based company, principally engaged in the research and development, manufacture and distribution of premade cocktails. The Company distributes its premade cocktails under the brand name RIO. The Company is also engaged in the research, development, manufacture and distribution of fragrances. The Company distributes its fragrance products under the brand name Bairun. The Company distributes its products mainly within domestic markets.

Shanghai Maling Aquarius (A) (SC SH)

Shanghai Maling Aquarius is engaged in the food and beverage manufacturing industry. Co.'s main products are comprised of canned food, flavorings, packaging drinks, including oolong tea, fresh orange juice and green tea, and other packaging food and beverage products. Co. is also engaged in assets management; electronic commercial tradings; provision of information collection activities and economic information services; sales of food, tinplates, flavorings, tinplate printing, chemical raw materials, food processing machineries and parts; domestic trading; and import and export of various commodities and technology.

Shenzhen Agricultural Products Group (A)

Shenzhen Agricultural Products is engaged in the development, construction, operation and management of wholesale market for agricultural products; operation of market leasing and selling businesses; domestic trading; commodities supply; provision to wholesale market for agricultural products include groceries, food shops, transportation, loading and unloading, storage and packaging services; provision of information and consultation services; property management; and hotel management. Through its subsidiaries, Co. is also engaged in the investment management; cultivation; manufacture of feeds; sale of pork; as well as fruits and vegetables trading.

Stillfront Group AB

Stillfront Group AB (publ) is a Sweden-based independent creator, publisher and distributor of digital games. The Company operates through a number of near-autonomous subsidiaries, including Bytro Labs in Germany, Coldwood Interactive in Sweden, Power Challenge in the United Kingdom and Sweden, and Dorado Online Games in Malta, Simutronics in the United States, and Babil Games in United Arab Emirates and Jordan, among others. The Company's games portfolio includes Call of War, DragonRealms, ManagerZone Football, Lara Croft Relic Run, Supremacy 1914 and Unravel, among others. The games are distributed globally, however the main markets are Sweden, Germany, the United States, United Kingdom, Middle East and North Africa.

Three Squirrels (A)

Three Squirrels Inc. Three Squirrels Inc. is a China-based company mainly engaged in the retail business of snack food e-commerce. The Company is mainly engaged in the research, development, testing, packaging and sales of its own branded snack foods. The product portfolio covers many major snack food categories such as nuts, dried fruits, dried fruit, flower tea and snacks. The Company's core brand is three squirrels. The Company mainly operates its business in domestic market.

Top Glove Corporation Bhd.

Top Glove is a holding company. Co. is engaged in the provision of management services. Through its subsidiaries, Co. is engaged in the manufacturing and trading of gloves, the provision of management services, property investment, investment holding, producing and selling concentrate latex, as well as plantation of rubber trees. Through its associate, Sonic Clean Pte. Ltd., Co. provides aqueous cleaning services, consumable cleaning and subassembly work in clean room environment and investment holding. Co. and its subsidiaries have five reportable operating segments: Malaysia, Thailand, The People's Republic of China, The British Virgin Islands, and Others.

Vinda International Holdings Limited

Vinda International Holdingsis principally engaged in investment holding. Through its subsidiaries, Co. is principally engaged in the manufacture and sales of household paper products and personal care products. Co.'s products include toilet roll, hanky, box tissue, paper napkin,sanitary napkins, softpack, wet wipe, baby diaper and others. Co. manages its four major product categories for household paper, incontinence care, feminine care and baby care under ten brands, namely Vinda, Tempo, Tork, Babyfit, Libero, Sealer, VIA, Libresse, TENA and Dr.P.

Weihai Guangwei Composites Co. Ltd. Class A

Weihai Guangwei Composites Co., Ltd. is a China-based company principally engaged in the research and development, production and sales of carbon fiber and related fabric products. The Company's principal products include carbon fibers, carbon fiber fabrics, carbon fiber prepreg products, carbon fiber composite materials and carbon fiber production equipment. Its products are mainly used in the military, aerospace, sporting goods, automotive industry, energy equipment, medical equipment, construction machinery, transportation and construction, as well as other fields. The Company principally distributes its products in domestic market.

Wiwynn Corp.

Wiwynn Corp is a Taiwan-based company mainly engaged in the research, development, design, manufacture, testing and distribution of servers for cloud services and Hyperscale Data Centers. The Company's products mainly include computers and peripheral equipment, data storage media, electrical equipment and audio-visual electronic products, information software and others. The Company mainly distributes its products in Taiwan, Americas, Europe, Asia and other regions.

Yihai International Holding Ltd.

Yihai International Holding Ltd is an investment holding company. The Company and its subsidiaries are principally engaged in the research, development, manufacturing, distribution and sales of compound condiments. The Company's products mainly include hot pot soup flavoring, hot pot dipping sauce, chicken essence and Chinese-style compound condiment products. The Company's subsidiaries include Yihai Ltd., Yihai (China) Co., Ltd., Yihai (Shanghai) Food Co., Ltd. Zhengzhou Shuhai Enterprise Co., Ltd, Chengdu Yueyihai Co., Ltd., Yihai Beijing Trading Co., Ltd, as well as Yihai (Bazhou) Food Co., Ltd., among others. The Company distributes its products within domestic and to overseas markets.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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