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01/12/21 Briefing

The S&P 500 futures trade 63 points, or 1.4%, above fair value as investors adopt a buy-the-dip mindset and put new money to work on this first day of the month.

The market has been rattled in recent days by uncertainty surrounding the Omicron variant and an indication from Fed Chair Powell that the Fed could be more aggressive in tightening policy to temper inflation. These are still factors investors will have to consider, but the rebound-minded action today has muted these concerns for now.

Salesforce.com (CRM 266.00, -18.96, -6.7%), meanwhile, has evaded buying interest with a 7% decline after the company issued downside EPS and revenue guidance. Merck (MRK 76.50, +1.59, +2.1%) is up 2% after an FDA advisory panel narrowly endorsed the company's COVID-19 oral antiviral.

Long-term interest rates are also trying to rebound, but they're getting outpaced by the rise in short-term rates as the market continues to expect a less-dovish policy course. The 2-yr yield is up eight basis points to 0.60%, and the 10-yr yield is up four basis points to 1.48%. The U.S. Dollar Index is flat at 96.97.

WTI crude futures are up 4.6%, or $3.02, to $69.20/bbl after falling 5% yesterday. In related news, OPEC+ will meet over the next two days, and the EIA will release its weekly crude inventory report at 10:30 a.m. ET.

Other data will include the ADP Employment Change report for November (Briefing.com consensus 515,000) at 8:15 a.m. ET, the ISM Manufacturing Index for November (Briefing.com consensus 61.0%) at 10:00 a.m. ET, and Construction Spending for October (Briefing.com consensus 0.4%) at 10:00 a.m. ET.

The Fed Beige Book for December will be available at 2:00 p.m. ET.

In U.S. Corporate news:

  • salesforce.com (CRM 266.00, -18.96): -6.7% after issuing downside EPS guidance for fiscal Q4 and downside revenue guidance for fiscal Q1 and FY23. The company beat EPS estimates and promoted Bret Taylor to Vice Chair and Co-CEO.

  • Merck (MRK 76.50, +1.59): +2.1% after an FDA advisory panel narrowly endorsed the company's COVID-19 oral antiviral.

  • Hewlett Packard Enterprise (HPE 14.19, -0.16): -1.1% despite beating EPS estimates and providing in-line guidance.

  • DoorDash (DASH 185.00, +6.23): +3.5% after the stock was upgraded to Buy from Hold at Gordon Haskett.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Wednesday on a mostly higher note. Japan's Nikkei: +0.4% Hong Kong's Hang Seng: +0.8% China's Shanghai Composite: +0.4% India's Sensex: +1.1% South Korea's Kospi: +2.1% Australia's ASX All Ordinaries: -0.4%.

  • In economic data:

  • China's November Caixin Manufacturing PMI 49.9 (expected 50.5; last 50.6)

  • Japan's November Manufacturing PMI 54.5 (last 54.2) and Q3 Capital Spending 1.2% yr/yr (last 5.3%)

  • South Korea's November trade surplus $3.09 bln (last surplus of $1.78 bln). November Imports 43.6% yr/yr (expected 40.5%; last 37.7%) and November Exports 32.1% yr/yr (expected 27.7%; last 24.1%). November Nikkei Manufacturing PMI 50.9 (last 50.2) o India's November Markit Manufacturing PMI 57.6 (expected 55.1; last 55.9)

  • Australia's Q3 GDP -1.9% qtr/qtr (expected -2.7%; last 0.7%); 3.9% yr/yr (expected 3.0%; last 9.5%). November Manufacturing PMI 59.2 (last 58.2) and November Commodity Prices 36.2% yr/yr (last 42.8%)

  • New Zealand's October Building Consents -2.0% m/m (last -2.0%)


  • In news:

  • China's Vice Premier Liu said that the country's 2021 GDP growth will be above target.

  • Press reports from South Korea indicate that the country's government is being lobbied to increase tax and R&D subsidies to the semiconductor industry.

  • Australia's Manufacturing PMI was in expansionary territory for the 18th month in a row while Japan's Manufacturing PMI reached its highest level since January 2018.

  • China's Caixin Manufacturing PMI fell into contraction for the first time in three months.



  • Major European indices trade on a firmly higher note. STOXX Europe 600: +1.3% Germany's DAX: +1.8% U.K.'s FTSE 100: +1.6% France's CAC 40: +1.8% Italy's FTSE MIB: +1.9% Spain's IBEX 35: +1.8%.

  • In economic data:

  • Eurozone's November Manufacturing PMI 58.4 (expected 58.6; last 58.6)

  • Germany's November Manufacturing PMI 57.4 (expected 57.6; last 57.6). October Retail Sales -0.3% m/m (expected 1.0%; last -1.9%); -2.9% yr/yr (expected -2.0%; last -0.6%)

  • U.K.'s November Manufacturing PMI 58.1 (expected 58.2; last 58.2). November Nationwide HPI 0.9% m/m (expected 0.5%; last 0.7%); 10.0% yr/yr (expected 9.3%; last 9.9%)

  • France's November Manufacturing PMI 55.9 (expected 54.6; last 54.6)

  • Italy's November Manufacturing PMI 62.8 (expected 61.1; last 61.1)

  • Spain's November Manufacturing PMI 57.1 (expected 57.9; last 57.4)

  • Swiss November procure.ch PMI 62.5 (expected 64.4; last 65.4). November CPI 0.0% m/m (expected -0.1%; last 0.3%); 1.5% yr/yr (expected 1.4%; last 1.2%)


  • In news:

  • Germany's incoming Chancellor Scholz said that action will have to be taken if inflation does not ease and that high inflation over the long run will not be tolerated.

  • Manufacturing PMI readings from major economies remained in expansionary territory, though they were mixed relative to expectations.

  • German real estate company Adler announced a sale of its EUR800 mln property portfolio.



U.S. equity futures:

  • S&P 500 Futures: +61 @ 4,628

  • DJIA Futures: +319 @ 34,802

  • Nasdaq 100 Futures: +248 @ 16,384

Overseas:

  • Europe: DAX +1.8%, FTSE +1.6%, CAC +1.8%

  • Asia: Nikkei +0.4%, Hang Seng +0.8%, Shanghai Composite +0.4%

Commodities:

  • Crude Oil +3.00 @ 69.18

  • Nat Gas -0.144 @ 4.423

  • Gold +12.50 @ 1789.00

  • Silver +0.135 @ 22.950

  • Copper +0.0375 @ 4.3175

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Allbirds (BIRD) reports Q3 results, slightly beats on revs, guides FY22 revenue inline

  • Ambarella (AMBA) beats by $0.08, beats on revs; guides JanQ revs above consensus

  • Arteris (AIP) beats by $0.06, misses on revs; guides Q4 revs in-line

  • AT&T's (T) Communications CEO provides update at Wells Fargo Technology Media and Telecom Summit; says wireless delivered best-ever EBITDA in 3Q21

  • Box (BOX) beats by $0.01, beats on revs; guides Q4 EPS in-line, revs above consensus; guides FY22 EPS above consensus, revs above consensus

  • Bright Health Group's (BHG) NeueHealth expects to generate approx. $2 bln in revenue next year

  • BRP Inc. (DOOO) reports Q3 results

  • Donaldson (DCI) beats by $0.06, beats on revs; raises FY22 EPS in-line

  • Emcore (EMKR) misses by $0.03, beats on revs; guides DecQ revs below consensus

  • G-III Apparel (GIII) beats by $0.36, reports revs in-line; raises FY22 EPS above consensus, revs above consensus

  • GlobalFoundries (GFS) beats by $0.07, revs in-line; guides Q4 EPS mid-point above consensus, guides Q4 revs in-line

  • Hewlett Packard Enterprise (HPE) beats by $0.03, reports revs in-line; guides Q1 EPS in-line; reaffirms FY22 EPS guidance

  • Humana (HUM) reaffirms FY21 guidance

  • Li Auto (LI) reports November deliveries increased 190.2% yr/yr

  • NetApp (NTAP) beats by $0.07, reports revs in-line; guides JanQ EPS in-line, revs in-line; guides FY22 EPS in-line, revs in-line

  • NIO (NIO) reports November sales increased 105.6% yr/yr

  • Patterson Companies (PDCO) beats by $0.08, beats on revs; raises FY22 EPS in-line

  • Philip Morris International (PM) reaffirms FY21 guidance

  • Royal Bank of Canada (RY) misses by CAD 0.13, beats on revs

  • Salesforce (CRM) beats by $0.35, reports revs in-line; guides JanQ EPS below consensus, revs in-line; guides AprQ revs below consensus; guides FY23 revs below consensus; promotes Bret Taylor to co-CEO

  • XPeng (XPEV) reports November deliveries increased 270% yr/yr

  • Zscaler (ZS) beats by $0.02, beats on revs; guides JanQ EPS below consensus, revs above consensus; guides FY22 EPS below consensus, revs in-line


  • General News:

  • House could vote on continuing resolution to fund government passed December 3 deadline today, according to CNN

  • Federal Judge blocked President Biden's vaccination mandate for healthcare workers, according to the New York Times

  • The Biden administration is planning more testing requirements for international travelers coming to the US and returning US citizens that vacationed in other countries, according to the Washington Post

  • China plans to ban key IPO loophole used by technology companies, according to Bloomberg

  • Macau Gaming Inspection and Coordination Bureau earlier reported November gross revs +0.01% yr/yr to HKD 6.749 bln versus -40% in October of 2021

  • Allegiant Travel (ALGT) and Viva Aerobus announced commercial alliance being pursued; to file antitrust immunity with the U.S. Department of Transportation

  • AMC Entertainment (AMC) has biggest day of ticket sales for a single title since reopening for SPIDER-MAN: NO WAY HOME on Monday, Nov 29

  • Ault Global Holdings (DPW) reports bimonthly Bitcoin production and mining operation report

  • AVEO Oncology (AVEO) announces the appointment of Jeb Ledell as chief operating officer

  • BioXcel Therapeutics' (BTAI) BXCL501 PDUFA date extended by three months to April 5, 2022

  • Bitfarms (BITF) Mined over 3,000 Bitcoin in 2021 through November

  • Build-A-Bear Workshop (BBW) declares special cash dividend of $1.25/share; authorizes $25 mln share repurchase program

  • Cinemark (CNK) reports No Way Home has achieved second biggest advance ticket sales of all time for Cinemark

  • COMPASS Pathways (CMPS) announces further positive results from groundbreaking phase IIb trial of investigational COMP360 psilocybin therapy for treatment-resistant depression

  • CTI BioPharma (CTIC): FDA extends review period for pacritinib NDA

  • Delta Apparel (DLA) names Simone Walsh as new CFO

  • Energous' (WATT) new 10W WattUp PowerHub received U.S. FC Part 18 grant of equipment authorization for 10W of conducted wireless power transfer

  • Ethan Allen (ETD) increases quarterly cash dividend to $0.29/share from $0.25/share

  • Exxon Mobil (XOM) announces corporate plans to 2027 - supports approximately doubling earnings and cash flow potential

  • Fair Isaac (FICO) approves new stock repurchase program to acquire up to $500 mln the company's common stock

  • First American Financial (FAF) announced that the United States Patent and Trademark Office has issued two patents for the innovative application of artificial intelligence (AI) and text-analysis methods to title production

  • Fresenius Medical Care (FMS) announces changes to Management Board, reflecting the transformation to the company's new operating model (being launched in 2023)

  • GAN Limited (GAN) authorizes a share repurchase program to acquire up to an aggregate of $5 mln of its ordinary shares

  • HealthStream (HSTM) approves $20 mln share repurchase authorization

  • Immunome (IMNM) has conducted an assessment of the reported mutations in the new SARS-CoV-2 variant, Omicron

  • Ironwood Pharma (IRWD) appoints Sravan Emany as Chief Financial Officer

  • JP Morgan (JPM): Investors want JP Morgan to move healthcare conference out of San Francisco due to crime problems in the city, according to the New York Post

  • Mastercard (MA) authorizes $8 bln share repurchase program; increases quarterly cash dividend to $0.49/share from $0.44/share

  • Match Group (MTCH) announced the settlement of Rad, et al. v. IAC/InterActiveCorp, et al. and related arbitrations

  • McCormick (MKC) increases quarterly dividend to $0.37/share from $0.34/share

  • Merck (MRK) and Ridgeback Statement on Positive FDA Advisory Committee Vote for Investigational Oral Antiviral Molnupiravir for Treatment of Mild to Moderate COVID-19 in High Risk Adults

  • Merck (MRK): U.S. FDA accepts for priority review the supplemental biologics license application for Merck's Vaxneuvance or use in infants and children

  • Microsoft (MSFT) shareholders want more disclosure regarding sexual harassment, according to the Wall Street Journal

  • Polaris Industries (PII) partners with Qmerit to maximize customer convenience for home EV charging installation

  • Quidel (QDEL) issues statement regarding the Omicron variant

  • Rallybio (RLYB) announced data from its ongoing Phase 1/2 study of RLYB211 showing significant benefit over placebo

  • Raytheon Technologies (RTX) awarded $450 mln Navy contract

  • Rush Enterprises (RUSHA) approves new $100 mln stock repurchase program

  • SAB Biotherapeutics (SABS) announces SAB-176 met its primary endpoint in phase 2a challenge study in adults infected with influenza virus

  • Sage Therapeutics (SAGE) and Biogen Announce Positive, One-Year Zuranolone 50 mg Data in the Ongoing Open-Label SHORELINE Study in Patients with MDD

  • Sanofi (SNY) reiterates confidence in strong growth outlook and showcases pipeline of innovative vaccine candidates

  • SQZ Biotechnologies (SQZ) announces that its China Initiative has been accepted by the Roche Accelerator

  • Stewart Info (STC) increases quarterly cash dividend to $0.375 per share, prior $0.33 per share

  • Tattooed Chef (TTCF) promotes Gaspare Guarrasi to COO, effective November 29

  • Thor Industries (THO) promotes Todd Woelfer to SVP & Chief Operating Officer

  • Treace Medical Concepts (TMCI) announces grant of US patent and allowance of US patent application on bone positioner technology for bunion correction

  • Twitter (TWTR): Cathie Wood purchased million shares of Twitter, according to Reuters

  • VBI Vaccines (VBIV) announces FDA approval for PreHevbrio

  • Vertex Pharma (VRTX) announces positive results from Phase 2 study of VX-147

  • Viatris (VTRS) wins Federal Circuit Court appeal upholding District Court decision invalidating Biogen's (BIIB) Tecfidera patent

  • Wabash Natl (WNC) releases new light-duty home delivery truck; secures over $10 mln initial order from a large grocery retailer for delivery in 1H22


  • M&A:

  • Aecom Tech (ACM) signs definitive agreement to sell Oil & Gas maintenance and turnaround services business; terms not disclosed

  • ASE Technology (ASX) announces the proposed sale and disposal of equity interests in its subsidiaries, GAPT Holding and ASE (Kun Shan) to Wise Road Capital for a cash consideration of $1.46 bln

  • Atlantic Coastal Acquisition Corp. (ACAH) enters agreement to combine with industrial additive manufacturing solutions firm Essentium; to trade under ticker ADTV, includes PIPE investment of $40 mln

  • Blackstone (BX) announces that Blackstone Energy Partners has agreed to acquire Irth Solutions; financial terms not disclosed

  • Cenovus Energy (CVE) agrees to sell Husky retail fuels network and Wembley assets in Conventional business for nearly $660 mln

  • Sanofi (SNY) to acquire Origimm Biotechnology

  • U.S. Physical Therapy (USPH) announced the acquisition of a 70% ownership interest in a leading provider of industrial injury prevention services


  • Syndicate:

  • AgileThought (AGIL) files for 2.4 mln share common stock offering

  • Krystal Biotech (KRYS) prices offering of 2,666,667 shares of its common stock at $75.00 per share

  • Lithium Americas (LAC) announces offering of US$225.0 mln aggregate principal amount of convertible senior notes due 2027

  • Longeveron (LGVN) enters into securities purchase agreement with certain institutional investors to purchase ~$20.5 mln worth of its common stock and warrants in a private placement

  • MEI Pharma (MEIP) announces public offering of 17.5 mln common shares

  • Seritage Growth Properties (SRG) files for 16,428,149 share common stock offering by selling shareholders

  • Soluna Holdings (SLNH) files for $150 mln mixed securities shelf offering; also files for 3,552,146 share common stock offering by selling shareholders


  • IPOs:

  • Expected to Price:

  • Chicago Atlantic Real Estate Finance (Nasdaq: REFI): The commercial real estate finance company dedicated to making loans to operators and property owners in cannabis industry is expected to price its 6.3 M share IPO between $16-$18.



Gapping Up/Down

  • Gapping up:

  • AMBA +16.8%, BOX +9.6%, GAN +8.6%, ZS +6.7%, LI +5.9%, DOOO +5.7%, SAGE +5.4%, NTES +4.4%, XPEV +4.3%, NIO +4.2%, MRK +3.8%, AIP +3.7%, CNK +3.1%, AMC +3.1%, BBW +2.5%, MA +2.1%, IWM +2.1%, RTX +1.7%, NTAP +1.7%, CVE +1.6%, QQQ +1.4%, IMGN +1.3%, SPY +1.3%, TTCF +1.2%, SRG +1.1%, RY +1%, T +0.9%, DIA +0.8%, MKC +0.7%


  • Gapping down:

  • LGVN -20.6%, CTIC -16.9%, AGIL -9%, VXX -7.3%, EMKR -7.2%, CRM -6%, BIRD -3.4%, KRYS -3.2%, LAC -3.1%, GFS -1.6%, HPE -1%, MEIP -0.9%


Analyst Research (see Upgrades/Downgrades calendar for full list):

  • Upgrades

  • American Equity Investment Life (AEL) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt $42

  • Ardelyx (ARDX) upgraded to Buy from Neutral at Ladenburg Thalmann; tgt $6

  • Brixmor Property (BRX) upgraded to Market Perform from Underperform at BMO Capital Markets; tgt $25

  • Capital One (COF) upgraded to Neutral from Underperform at Robert W. Baird; tgt $145

  • DoorDash (DASH) upgraded to Buy from Hold at Gordon Haskett; tgt $217

  • Grupo Aeroportuario Del Sureste (ASR) upgraded to Neutral from Sell at Goldman; tgt raised to $225


  • Downgrades:

  • American Water Works (AWK) downgraded to Underweight from Equal Weight at Wells Fargo; tgt lowered to $170

  • Krispy Kreme, Inc. (DNUT) downgraded to Sell from Neutral at Goldman; tgt lowered to $14


  • Others:

  • Alkermes (ALKS) initiated with a Neutral at Citigroup; tgt $22

  • Caribou Biosciences (CRBU) initiated with an Outperform at Oppenheimer; tgt $36

  • CNH Industrial (CNHI) resumed with an Overweight at JP Morgan; tgt raised to $20

  • CVS Health (CVS) initiated with a Buy at Seaport Research Partners; tgt $110


Upcoming Events:

  • Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Nov 27 (Briefing.com Consensus NA; Prior 1.8%)

  • 08:15 ET: ADP Employment Change for Nov (Briefing.com Consensus 515K; Prior 568K)

  • 09:45 ET: IHS Markit Manufacturing PMI - Final for Nov (Briefing.com Consensus NA; Prior 59.1)

  • 10:00 ET: ISM Manufacturing Index for Nov (Briefing.com Consensus 61.0%; Prior 61.1%)

  • 10:00 ET: Construction Spending for Oct (Briefing.com Consensus 0.4%; Prior 0.0%)

  • 10:30 ET: EIA Crude Oil Inventories for Nov. 27 (Briefing.com Consensus NA; Prior +1.0M)

  • 14:00 ET: Fed's Beige Book for Dec.


  • Earnings:

  • Monday (Nov 29)

  • Morning: FRO LI

  • Afternoon: GBDC


  • Tuesday (Nov 30)

  • Morning: BNS BZUN MOMO JKS

  • Afternoon: AMBA BOX HPE NTAP CRM ZS


  • Wednesday (Dec 1)

  • Morning: DCI GIII PDCO RY

  • Afternoon: AI CRWD DSGX ESTC FIVE NCNO OKTA PVH SMTC SNOW SPLK SNPS VEEV ZUO


  • Thursday (Dec 2)

  • Morning: CM DG GMS KR SCWX SIG TD

  • Afternoon: ASAN COO DOCU DOMO GWRE JOAN MRVL OLLI OOMA SMAR SWBI ULTA VRNT ZUMZ


  • Friday (Dec 3)

  • Morning: BMO BIG DOLE GCO HIBB




Asia & Europe detail:

Asia: Nikkei +0.4%, Hang Seng +0.8%, Shanghai Composite +0.4%

Equity indices in the Asia-Pacific region ended Wednesday on a mostly higher note. China's Vice Premier Liu said that the country's 2021 GDP growth will be above target. Press reports from South Korea indicate that the country's government is being lobbied to increase tax and R&D subsidies to the semiconductor industry. Australia's Manufacturing PMI was in expansionary territory for the 18th month in a row while Japan's Manufacturing PMI reached its highest level since January 2018. China's Caixin Manufacturing PMI fell into contraction for the first time in three months.

  • In economic data:

  • China's November Caixin Manufacturing PMI 49.9 (expected 50.5; last 50.6)

  • Japan's November Manufacturing PMI 54.5 (last 54.2) and Q3 Capital Spending 1.2% yr/yr (last 5.3%)

  • South Korea's November trade surplus $3.09 bln (last surplus of $1.78 bln). November Imports 43.6% yr/yr (expected 40.5%; last 37.7%) and November Exports 32.1% yr/yr (expected 27.7%; last 24.1%). November Nikkei Manufacturing PMI 50.9 (last 50.2) o India's November Markit Manufacturing PMI 57.6 (expected 55.1; last 55.9)

  • Australia's Q3 GDP -1.9% qtr/qtr (expected -2.7%; last 0.7%); 3.9% yr/yr (expected 3.0%; last 9.5%). November Manufacturing PMI 59.2 (last 58.2) and November Commodity Prices 36.2% yr/yr (last 42.8%)

  • New Zealand's October Building Consents -2.0% m/m (last -2.0%)


---Equity Markets---

  • Japan's Nikkei: +0.4%

  • Hong Kong's Hang Seng: +0.8%

  • China's Shanghai Composite: +0.4%

  • India's Sensex: +1.1%

  • South Korea's Kospi: +2.1%

  • Australia's ASX All Ordinaries: -0.4%

---FX---

  • USD/JPY: +0.2% to 113.36

  • USD/CNH: +0.1% to 6.3705

  • USD/INR: -0.2% to 74.94

Europe: DAX +1.8%, FTSE +1.6%, CAC +1.8%

Major European indices trade on a firmly higher note. Germany's incoming Chancellor Scholz said that action will have to be taken if inflation does not ease and that high inflation over the long run will not be tolerated. Manufacturing PMI readings from major economies remained in expansionary territory, though they were mixed relative to expectations. German real estate company Adler announced a sale of its EUR800 mln property portfolio.

  • In economic data:

  • Eurozone's November Manufacturing PMI 58.4 (expected 58.6; last 58.6)

  • Germany's November Manufacturing PMI 57.4 (expected 57.6; last 57.6). October Retail Sales -0.3% m/m (expected 1.0%; last -1.9%); -2.9% yr/yr (expected -2.0%; last -0.6%)

  • U.K.'s November Manufacturing PMI 58.1 (expected 58.2; last 58.2). November Nationwide HPI 0.9% m/m (expected 0.5%; last 0.7%); 10.0% yr/yr (expected 9.3%; last 9.9%)

  • France's November Manufacturing PMI 55.9 (expected 54.6; last 54.6)

  • Italy's November Manufacturing PMI 62.8 (expected 61.1; last 61.1)

  • Spain's November Manufacturing PMI 57.1 (expected 57.9; last 57.4)

  • Swiss November procure.ch PMI 62.5 (expected 64.4; last 65.4). November CPI 0.0% m/m (expected -0.1%; last 0.3%); 1.5% yr/yr (expected 1.4%; last 1.2%)


---Equity Markets---

  • STOXX Europe 600: +1.3%

  • Germany's DAX: +1.8%

  • U.K.'s FTSE 100: +1.6%

  • France's CAC 40: +1.8%

  • Italy's FTSE MIB: +1.9%

  • Spain's IBEX 35: +1.8%

---FX---

  • EUR/USD: -0.2% to 1.1319

  • GBP/USD: +0.2% to 1.3324

  • USD/CHF: +0.3% to 0.9212


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