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04/10/23 Briefing


The S&P 500 futures are up 8 points and are trading 0.2% above fair value. The Nasdaq 100 futures are up 30 points and are trading 0.3% above fair value. The Dow Jones Industrial Average futures are up 52 points and are trading 0.2% above fair value.

Stock futures indicate a higher open. Treasury yields had been pressing higher overnight, but recent price action has rates declining, which is offering some support to stocks. The 2-yr note yield is down two points from yesterday at 5.13% after hitting 5.18% overnight. The 10-yr note yield is down three basis points at 4.77% after hitting 4.88% overnight. There is also a growing sense that the stock market is oversold on a short-term basis and due for a bounce.

Following yesterday's close, the House voted 216-210 in an unprecedented action to remove Kevin McCarthy as Speaker of the House. House business will be at a standstill until a new Speaker is elected, which is adding to the political uncertainty.

The Reserve Bank of New Zealand left its official cash rate at 5.50%, as expected.

The weekly MBA Mortgage Applications Index fell 6.0% with purchase applications declining 6.0% and refinance applications plunging 7.0%. Other economic data today includes:

  • 8:15 ET: September ADP Employment Change (Briefing.com consensus 150,000; prior 177,000)

  • 9:45 ET: Final September S&P Global U.S. Services PMI (prior 50.5)

  • 10:00 ET: August Factory Orders (Briefing.com consensus 0.3%; prior -2.1%) and September ISM Non-Manufacturing Index (Briefing.com consensus 53.7%; prior 54.5%)

  • 10:30 ET: Weekly crude oil inventories (prior -2.17 mln)

In corporate news:

  • Intel (INTC 36.45, +0.76, +2.1%): to separate its Programmable Solutions Group operations into a standalone business, starting on January 1, 2024

  • Cal-Maine Foods (CALM 41.75, -5.75, -12.1%): misses by $0.31, misses on revs (two ests); to pay $0.006/share dividend in Q1

  • Apple (AAPL 170.88, -1.52, -0.9%): downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

  • Palantir Technologies (PLTR 15.38, +0.48, +3.3%): up after closing in on U.K. NHS contract, according to Bloomberg

  • Ford Motor (F 12.10, +0.03, +0.3%): made a comprehensive offer to the UAW in an effort to reach a tentative agreement on a new master labor agreement through April 30, 2028

  • Trinity Industries (TRN 22.49, -0.85, -3.6%): delivers 4,325 railcars in Q3, 685 below projections due to the closing of the U.S.-Mexico border

  • Fluor (FLR 35.32, +0.70, +2.0%): upgraded to Buy from Neutral at UBS

  • Boeing (BA 189.60, +0.68, +0.4%): United Airlines (UAL) orders 50 787-9 airplanes and secures an additional 50 options

  • Helen of Troy (HELE 108.00, -5.64, -5.0%): beats by $0.10, beats on revs; reaffirms FY24 EPS guidance, revs guidance

  • A10 Networks (ATEN 12.47, -2.70, -17.8%): expects Q3 revs of $56.5-58.5 mln; Q4 revs of $70-80 mln; notes industry headwinds caused delays, pushing deals into future periods

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note while markets in China remained closed for a holiday. Japan's Nikkei: -2.3%, Hong Kong's Hang Seng: -0.8%, China's Shanghai Composite: CLOSED, India's Sensex: -0.4%, South Korea's Kospi: -2.4%, Australia's ASX All Ordinaries: -0.8%.

    • In economic data:

      • Japan's September Services PMI 53.8 (expected 53.3; last 54.3)

      • South Korea's August Industrial Production 5.5% m/m (expected -0.2%; last -2.0%); -0.5% yr/yr (expected -6.2%; last -8.1%). August Retail Sales -0.3% m/m (last -3.3%). September Manufacturing PMI 49.9 (last 48.9)

      • Australia's September Services PMI 51.8 (expected 50.5; last 47.8). September AIG Manufacturing Index -12.8 (last -19.8) and September AIG Construction Index 7.1 (last -9.9)


  • In news:

    • There was speculation about Japan intervening in the foreign exchange market after the yen saw a brief spike against the dollar that was largely reversed over the next few hours.

    • Japan's 10-yr swap rate reached 1.00%, creeping up to the Bank of Japan's yield curve control limit.

    • South Korea's Manufacturing PMI remained in contractionary territory for the 15th month in a row while Australia's Services PMI reflected the first expansion in three months.

    • The Reserve Bank of New Zealand left its official cash rate at 5.50%, as expected.



  • Major European indices trade near their flat lines while regional sovereign debt is mixed. STOXX Europe 600: +0.4%, Germany's DAX: +0.3%, U.K.'s FTSE 100: UNCH, France's CAC 40: +0.4%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: -0.1%.

    • In economic data:

      • Eurozone's August PPI 0.6% m/m, as expected (last -0.5%); -11.5% yr/yr (expected -11.6%; last -7.6%). August Retail Sales -1.2% m/m (expected -0.3%; last -0.1%); -2.1% yr/yr (expected -1.2%; last -1.0%). September Services PMI 48.7 (expected 48.4; last 47.9)

      • Germany's September Services PMI 50.3 (expected 49.8; last 47.3)

      • U.K.'s September Services PMI 49.3 (expected 47.2; last 49.5)

      • France's September Services PMI 44.4 (expected 43.9; last 46.0)

      • Spain's September Services PMI 50.5 (expected 49.8; last 49.3)

      • Italy's Q2 GDP -0.4% qtr/qtr (last 0.6%); 0.3% yr/yr (last 2.1%). September Services PMI 49.9 (expected 50.0; last 49.8)


  • In news:

    • The European Commission launched an investigation into the need for tariffs to shield European producers from a flood of imports from China.

    • Bank of England Governor Bailey said that the BoE's 2.0% inflation target should not be changed.

    • Iceland left its policy rate at 9.25% after 14 consecutive rate hikes.



U.S. equity futures:

  • S&P 500 Futures +10 @ 4,240

  • DJIA Futures: +50 @ 33,053

  • Nasdaq 100 Futures: +39 @ 14,605

Overseas:

  • Europe: DAX +0.3%, FTSE UNCH, CAC +0.4%

  • Asia: Nikkei -2.3%, Hang Seng -0.8%, Shanghai Composite CLOSED

Commodities:

  • Crude Oil -1.64 @ 87.59

  • Nat Gas +0.031 @ 2.980

  • Gold +0.45 @ 1841.95

  • Silver -0.007 @ 21.370

  • Copper -0.0115 @ 3.6095


Earnings/Guidance:

  • A10 Networks ( ATEN 1.17% ) expects Q3 revs of $56.5-58.5 mln; Q4 revs of $70-80 mln; notes industry headwinds caused delays, pushing deals into future periods

  • Acuity Brands ( AYI 0.13% ) beats by $0.24, reports revs in-line

  • AngioDynamics ( ANGO 0.00% ) beats by $0.01, beats on revs; reaffirms FY24 EPS guidance, revs guidance

  • Cal-Maine Foods ( CALM 0.00% ) misses by $0.31, misses on revs (two ests); to pay $0.006/share dividend in Q1

  • Helen of Troy ( HELE 0.00% ) beats by $0.10, beats on revs; reaffirms FY24 EPS guidance, revs guidance

  • NovaGold Resources ( NG 0.85% ) misses by C$0.01 (two ests)

  • On ( ONON 0.50% ) provides three year financial outlook at Investor Day

  • Pixelworks ( PXLW 0.00% ) sees Q3 revs in-line; sees Q4 revs above expectations

  • RPM Inc ( RPM 1.48% ) beats by $0.09, beats on revs; guides Q2 revs in-line; reaffirms FY24 revs guidance

  • Tilray ( TLRY 0.00% ) misses by $0.05, beats on revs; reaffirms FY24 adjusted EBTIDA guidance

News:

  • House votes to remove Rep. Kevin McCarthy from the speakership by a vote of 216-210. The House will be at a total standstill until a new speaker is elected. Mr. McCarthy will not run for speaker again (House will return from recess next Wednesday), according to the New York Times

  • Accuray ( ARAY 0.00% ) announces that the registration dossier for the CNNC-Accuray joint venture Tomo C radiation therapy system for the Type B market has been approved by the Chinese National Medical Products Administration

  • Airbus ( EADSY ) receives order from United Airlines (UAL) for 60 additional A321neo aircraft

  • Allegiant Travel ( ALGT 0.00% ) expects to retire 21 177-seat A320 current engine option aircraft from its operating fleet through 2025 and will accelerate depreciation accordingly

  • American Outdoor Brands ( AOUT 0.00% ) appointed Brent A. Vulgamott to the role of Chief Operating Officer, effective October 2, 2023

  • Baker Hughes ( BKR 0.00% ) announces milestone electric-LNG award for ADNOC ruwais LNG export terminal

  • Barrick GOLD 0.28% strengthens Zambia partnership, invests in major expansion of Lumwana Mine

  • Biogen ( BIIB 0.00% ) announces that Ontario, New Brunswick, and Prince Edward Island have joined Quebec to reimburse PrBYOOVIZ

  • Boeing ( BA 0.58% ): United Airlines (UAL) orders 50 787-9 airplanes and secures an additional 50 options

  • Buenaventura ( BVN 1.33% ) announces temporary suspension of mining activities at Colquijirca's Tajo Norte Mine

  • CareDx ( CDNA 0.00% ) issues statement on Supreme Court decision regarding Stanford-Licensed Patents

  • Carriage Services ( CSV 13.98% ) confirms that it is continuing its process to review strategic alternatives

  • Coinbase ( COIN 0.00% ): SEC asked judge to deny Coinbase request to dismiss lawsuit, according to Reuters

  • DocGo ( DCGO 0.00% ) Partners with Main Line Health in Philadelphia to Provide Medical Transportation, and Agrees to Collaborate on Remote Patient Monitoring Initiatives

  • Eli Lilly ( LLY 2.43% ) announces leadership transitions; David Hyman will become Lilly's chief medical officer

  • Equitrans Midstream ( ETRN 2.39% ) reports that the Pipeline and Hazardous Materials Safety Administration issued a Consent Order incorporating the terms of a Consent Agreement entered into by PHMSA and the company as the operator of the Mountain Valley Pipeline project

  • Ford Motor ( F 1.95% ) made a comprehensive offer to the UAW in an effort to reach a tentative agreement on a new master labor agreement through April 30, 2028

  • Freeline Therapeutics ( FRLN 0.00% ) reports "positive" initial safety, tolerability and enzyme activity data from the ongoing Phase 1/2 GALILEO-1 trial evaluating FLT201, its adeno-associated virus gene therapy candidate, in Gaucher disease

  • FREYR Battery ( FREY 2.76% ) surpasses most complex remaining technical hurdle to commence initial fully automated production at the CQP in 4Q 2023

  • General Dynamics ( GD 0.98% ) awarded $967 mln U.S. Navy contract modification; General Dynamics Electric Boat awarded $967 mln contract modification for Virginia-Class submarines

  • Google ( GOOG 0.00% ): Anthropic in discussions to raise $2 bln from Google and others, according to The Information

  • Insulet ( PODD 0.00% ) announces that its CFO has decided to step down, effective October 20, 2023, to join 3M (MMM) as CFO of its Health Care business

  • Intel ( INTC 0.00% ) to separate its Programmable Solutions Group operations into a standalone business, starting on January 1, 2024

  • Ionis Pharma ( IONS 0.00% ) shares significant business and pipeline progress at Innovation Day, highlighting strength of capabilities from research and technology through commercialization

  • Lithium Americas ( LAC 1.00% ) completes reorganization into two independent publicly traded companies

  • MarketAxess ( MKTX 0.00% ) announces monthly volume statistics for September; Total credit average daily volume of $11.2 billion, up 1.7%

  • MoonLake Immunotherapeutics ( MLTX 0.00% ): Phase 2 MIRA primary analysis trial results (12-week) for MoonLake's Nanobody sonelokimab in hidradenitis suppurativa to be presented at a late-breaking session at the European Academy of Dermatology and Venereology Congress

  • Natera ( NTRA 0.00% ): Supreme Court denies CareDx (CDNA) request for appeal in patent case with Natera

  • New Found Gold Corp ( NFGC 0.51% ) intercepts 17.1 g/t Au over 11.35m & 1.82 g/t Au over 40m, further defines high-grade domain at Keats West

  • Nokia ( NOK 1.34% ) Board of Directors resolved on issuing shares to the company and on a subsequent directed issuance under Nokia Equity Programs

  • Ocular Therapeutix ( OCUL 0.00% ) Announces Initiation of its First Pivotal Clinical Trial of OTX-TKI in Wet AMD

  • Palantir Technologies ( PLTR 6.17% ) closing in on U.K. NHS contract, according to Bloomberg

  • Paramount ( PARA 0.00% ) mulling dropping India streaming plan, according to Bloomberg

  • REGENXBIO ( RGNX 0.00% ) presents interim clinical data from Phase I/II AFFINITY DUCHENNE Trial of RGX-202 at 28th annual international congress of the World Muscle Society

  • Roche Hldg ( RHHBY ) reports majority of newborn babies with Spinal Muscular Atrophy treated With Genentech's Evrysdi able to sit independently after 1 year of treatment

  • Selective Insurance ( SIGI 0.00% ) announces that CFO Mark Wilcox has resigned; Anthony Harnett appointed interim CFO until a permanent successor is appointed, effective Nov 3

  • Spotify ( SPOT 2.28% ) offering over 150,000 audiobooks as part of its premium subscriptions

  • StoneCo ( STNE 0.00% ) authorizes share repurchase program of up to R$300 million in outstanding Class A common shares

  • Takeda Pharma ( TAK 2.16% ): Takeda's Dengue Vaccine recommended by World Health Organization advisory group for introduction in high dengue burden and transmission areas in children ages six to 16 years

  • Teva Pharma ( TEVA 4.10% ) and Sanofi announce exclusive collaboration to deliver inflammatory bowel disease treatment

  • Tradeweb Markets ( TW 0.00% ) reports total trading volume for September 2023 of $31.8 trillion

  • Trinity Industries ( TRN 1.02% ) delivers 4,325 railcars in Q3, 685 below projections due to the closing of the U.S.-Mexico border

  • United Airlines ( UAL 0.00% ) orders 110 more aircraft for delivery beginning in 2028, adding flexibility for its long-term fleet

  • Vertex ( VRTX 0.00% ) presents positive, updated VX-880 results from ongoing Phase 1/2 Study in Type 1 Diabetes at the European Association for the Study of Diabetes 59th Annual Meeting

  • WPP ( WPP 1.45% ) aiming to expand Japan staff by 40%, according to Nikkei

M&A:

  • American Water Works ( AWK 2.30% ): New Jersey American Water completes its acquisition of the wastewater collection system of the Borough of Somerville for $7 million

  • BP ( BP 0.58% ) is exploring the possible sale of a 49% stake in its US pipeline network in the Gulf of Mexico for as much as $1 bln, according to Reuters

  • Brooge Holdings ( BROG 0.00% ) receives formal proposal submitted by GULFNAV to acquire Brooge

  • Civitas Resources ( CIVI 0.32% ) Adds accretive bolt-on in Permian Basin

  • Essential Utilities ( WTRG 1.03% ) announces its Aqua Pennsylvania subsidiary signed a purchase agreement to acquire the water system in Greenville, PA for $18 mln

  • Eton Pharmaceuticals ( ETON 0.00% ) to acquire an abbreviated new drug application for Nitisinone Capsules via Oakrum Pharma's Chapter 11 bankruptcy proceeding

  • Honda Motor ( HMC 2.68% ) commences tender offer for shares of Yachiyo Industry Co., Ltd

  • LiveVox ( LVOX 0.00% ): NICE (NICE) to acquire LiveVox for $3.74 per share in cash

  • Novartis ( NVS 2.05% ) executes Sandoz Spin-off; reaffirms outlook

  • PTC ( PTC 0.00% ) has acquired pure-systems, a provider of product and software variant management solutions

  • Teledyne Tech ( TDY 0.74% ) to acquire Xena Networks ApS; financial terms were not disclosed

Syndicate:

  • CEMEX S.A. ( CX 4.81% ) returns to the Mexican debt capital markets with the successful pricing of Sustainability-Linked Long-Term Notes

  • EPAM Systems ( EPAM 4.49% ) files mixed shelf securities offering

  • General Motors ( GM 3.36% ) entered into a new 364-Day Revolving Credit Agreement with JPMorgan Chase Bank

  • Pacific Biosciences ( PACB 0.00% ) files for 8,988,391 share common stock offering by selling shareholders

IPOs:

  • Priced to Trade:

    • No IPOs expected.


Gapping Up/Down

  • Gapping up:

    • BROG +17.3%, ONON +5.7%, IGMS +4.9%, ARAY +4.2%, PACB +3.1%, NTRA +3%, RGNX +2.8%, PLTR +2.2%, INTC +2%, STNE +1.4%


  • Gapping down:

    • ATEN -13%, CALM -12.4%, TRN -5.1%, CDNA -4.8%, NVS -3.9%, NG -3.1%, TAK -2.1%, VRTX -1.8%, FREY -1.7%, OCUL -1.3%, BP -1%, ETRN -0.9%


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

  • Upgrades

    • America Movil SA (AMX) upgraded to Buy from Neutral at UBS; tgt lowered to $22

    • Fluor (FLR) upgraded to Buy from Neutral at UBS; tgt raised to $47

    • Hub Group (HUBG) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $98

    • KeyCorp (KEY) upgraded to Peer Perform from Underperform at Wolfe Research

    • Life Time (LTH) upgraded to Equal Weight from Underweight at Wells Fargo; tgt $17

    • LyondellBasell (LYB) upgraded to Buy from Neutral at Citigroup; tgt raised to $106

    • Matson (MATX) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $113

    • ODDITY Tech Ltd. (ODD) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $37

    • Olaplex (OLPX) upgraded to Equal Weight from Underweight at Barclays

    • Orange (ORAN) upgraded to Buy from Underperform at BofA Securities; tgt raised to $13.65

    • RELX (RELX) upgraded to Buy from Neutral at Goldman


  • Downgrades:

    • Apple (AAPL) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets

    • Assoc Banc-Corp (ASB) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $18

    • B&G Foods (BGS) downgraded to Underweight from Neutral at Piper Sandler; tgt lowered to $8

    • Banc of California (BANC) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $13.50

    • First Horizon (FHN) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $11.50

    • First Interstate Bancsystem (FIBK) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $25

    • Newmark Group (NMRK) downgraded to Mkt Perform from Outperform at Raymond James

    • ON Semiconductor (ON) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $95

    • PPL Corp (PPL) downgraded to Neutral from Buy at UBS; tgt lowered to $25

    • Ryder System (R) downgraded to Peer Perform from Outperform at Wolfe Research

    • Sunnova Energy (NOVA) downgraded to Hold from Buy at Truist; tgt lowered to $11

    • Sunrun (RUN) downgraded to Hold from Buy at Truist; tgt lowered to $12

    • Trinseo (TSE) downgraded to Hold from Buy at Jefferies; tgt lowered to $9


  • Others:

    • DT Midstream (DTM) initiated with a Buy at Stifel; tgt $60

    • Fiverr (FVRR) initiated with a Buy at UBS; tgt $33

    • Lithium Argentina (LAAC) resumed with a Market Perform at BMO Capital Markets; tgt $7.50

    • Upwork (UPWK) initiated with a Neutral at UBS; tgt $13

    • ZipRecruiter (ZIP) initiated with a Neutral at UBS; tgt $13


Econ Data:

  • 07:00 ET: MBA Mortgage Applications Index for Sept 30 (Briefing.com Consensus NA; Prior -1.3%)

  • 08:15 ET: ADP Employment Change for Sept (Briefing.com Consensus 150K; Prior 177K)

  • 09:45 ET: S&P Global US Services PMI - Final for Sept (Briefing.com Consensus NA; Prior 50.5)

  • 10:00 ET: Factory Orders for Aug (Briefing.com Consensus 0.3%; Prior -2.1%)

  • 10:00 ET: ISM Non-Manufacturing Index for Sept (Briefing.com Consensus 53.7%; Prior 54.5%)

  • 10:30 ET: EIA Crude Oil Inventories for Sept 30 (Briefing.com Consensus NA; Prior -2.17M)

Earnings:

  • Tuesday (Oct 3)

    • Morning: MKC

    • Afternoon: CALM


  • Wednesday (Oct 4)

    • Morning: ANGO HELE RPM TLRY

    • Afternoon: ACCD RGP


  • Thursday (Oct 5)

    • Morning: CAG STZ LW

    • Afternoon: LEVI


Asia & Europe detail:

Asia: Nikkei -2.3%, Hang Seng -0.8%, Shanghai Composite CLOSED

Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note while markets in China remained closed for a holiday. There was speculation about Japan intervening in the foreign exchange market after the yen saw a brief spike against the dollar that was largely reversed over the next few hours. Meanwhile, Japan's 10-yr swap rate reached 1.00%, creeping up to the Bank of Japan's yield curve control limit. South Korea's Manufacturing PMI remained in contractionary territory for the 15th month in a row while Australia's Services PMI reflected the first expansion in three months. The Reserve Bank of New Zealand left its official cash rate at 5.50%, as expected.

  • In economic data:

    • Japan's September Services PMI 53.8 (expected 53.3; last 54.3)

    • South Korea's August Industrial Production 5.5% m/m (expected -0.2%; last -2.0%); -0.5% yr/yr (expected -6.2%; last -8.1%). August Retail Sales -0.3% m/m (last -3.3%). September Manufacturing PMI 49.9 (last 48.9)

    • Australia's September Services PMI 51.8 (expected 50.5; last 47.8). September AIG Manufacturing Index -12.8 (last -19.8) and September AIG Construction Index 7.1 (last -9.9)


---Equity Markets---

  • Japan's Nikkei: -2.3%

  • Hong Kong's Hang Seng: -0.8%

  • China's Shanghai Composite: CLOSED

  • India's Sensex: -0.4%

  • South Korea's Kospi: -2.4%

  • Australia's ASX All Ordinaries: -0.8%

---FX---

  • USD/JPY: UNCH at 149.08

  • USD/CNH: UNCH at 7.3189

  • USD/INR: UNCH at 83.22

Europe: DAX +0.3%, FTSE UNCH, CAC +0.4%

Major European indices trade near their flat lines while regional sovereign debt is mixed. The European Commission launched an investigation into the need for tariffs to shield European producers from a flood of imports from China. Bank of England Governor Bailey said that the BoE's 2.0% inflation target should not be changed. Iceland left its policy rate at 9.25% after 14 consecutive rate hikes.

  • In economic data:

    • Eurozone's August PPI 0.6% m/m, as expected (last -0.5%); -11.5% yr/yr (expected -11.6%; last -7.6%). August Retail Sales -1.2% m/m (expected -0.3%; last -0.1%); -2.1% yr/yr (expected -1.2%; last -1.0%). September Services PMI 48.7 (expected 48.4; last 47.9)

    • Germany's September Services PMI 50.3 (expected 49.8; last 47.3)

    • U.K.'s September Services PMI 49.3 (expected 47.2; last 49.5)

    • France's September Services PMI 44.4 (expected 43.9; last 46.0)

    • Spain's September Services PMI 50.5 (expected 49.8; last 49.3)

    • Italy's Q2 GDP -0.4% qtr/qtr (last 0.6%); 0.3% yr/yr (last 2.1%). September Services PMI 49.9 (expected 50.0; last 49.8)


---Equity Markets---

  • STOXX Europe 600: +0.4%

  • Germany's DAX: +0.3%

  • U.K.'s FTSE 100: UNCH

  • France's CAC 40: +0.4%

  • Italy's FTSE MIB: -0.1%

  • Spain's IBEX 35: -0.1%

---FX---

  • EUR/USD: +0.5% to 1.0514

  • GBP/USD: +0.5% to 1.2137

  • USD/CHF: -0.3% to 0.9173

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