01/19/06: Ex-Enron CFO, Richard Causey Witness For The Prosecution?
SUSIE GHARIB: A big break today for prosecutors in the
Enron case. Richard Causey, Enron`s former chief accounting officer, pleaded
guilty in the company`s accounting meltdown, agreed to help the government and
experts say Causey`s plea could provide crucial testimony against former Enron
CEO Jeffrey Skilling and former Chairman Kenneth Lay. Washington bureau chief
Darren Gersh has more.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Former Enron Chief
Accounting Officer Richard Causey walked into Federal court in Houston and pled
guilty as part of a deal that will send him to prison for seven years and cost
him $1.25 million. If a jury had convicted him of securities fraud and helping
bring down what was then the nation`s seventh largest company, Causey could have
faced more than 30 years behind bars. His attorney says Causey signed a plea
agreement, not an agreement to cooperate with prosecutors.
REID WEINGARTEN, ATTORNEY FOR RICHARD CAUSEY: What is true to the extent
that he has any involvement in upcoming legal proceedings, he will do one thing,
he tell the truth.
GERSH: Even so, if Causey helps the government`s case against former
Enron CEO Jeffrey Skilling and Enron Founder Ken Lay, prosecutors could ask to
reduce his sentence by two years. Skilling, Lay and Causey were scheduled to go
to trial together in mid-January and defense lawyers had hoped to keep the
former accountant on their side.
DANIEL PETROCELLI, ATTORNEY FOR JEFFREY SKILLING: Rick Causey did this
for one reason and one reason only and that was to protect his family. He tried
to reduce his exposure, so that he can get out and see his kids and spend a long
fruitful life with them. And the same awful dilemma has faced all of these
witnesses who have been threatened with indictment, prosecution, bankruptcy,
life in prison. They`ve had very little choice but to give in.
GERSH: Legal experts say Causey could now back up testimony by former
Enron Chief Financial Officer Andrew Fastow, who pled guilty last year. Causey
worked closely with Lay and Skilling and former Federal prosecutor Marc Powers
says Causey could help the jury understand what his former bosses were thinking.
MARC POWERS, SECURITIES LITIGATOR,BAKER & HOSTETLER: To be able to get
at the guy at the top, the top dog as the government did with Mr. Ebbers and the
WorldCom situation, you really have to show that this person at the top had
knowledge about the wrong doing and he may provide that essential link.
GERSH: But some legal experts say the case against Lay is weak. As
Enron`s chairman, he was one step removed from day to day operations and only
took back the CEO title after Skilling abruptly left the company. Causey`s
guilty plea today helps simplify the case.
JACOB FRENKEL, SHULMAN, ROGERS, GRANDAL: The government enables them to
focus much more closely on Skilling and Lay without Causey being almost a
distraction.
GERSH: Causey now becomes the 17th Enron executive to plead guilty. Lay
and Skilling`s trial has been pushed back to the end of January to give their
lawyers more time to regroup following the loss of a key ally. Darren Gersh,
NIGHTLY BUSINESS REPORT, Washington.
Nightly
Business Report transcripts are available on-line post broadcast.
The program is transcribed by eMediaMillWorks. Updates may
be posted at a later date. The views of our guests and commentators
are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly
Business Report is not and should not be considered as investment
advice. Copyright
(c) 2005 Community Television Foundation of South Florida,
Inc. ALL RIGHTS RESERVED. Terms of use.
01/19/06: The Yield Curve Normalizes
JEFF YASTINE: The bond market was the center of attention on Wall Street
again today, as the yield curve normalized after inverting yesterday for the
first time since 2000. That inversion has fueled debate about the health of the
U.S. economy. As Suzanne Pratt reports, it also raises questions about the
outlook for Treasury bonds next year.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: It has been five
years since the yield curve last inverted in the U.S. Treasury market. It is a
rather technical phenomenon, but one that raises eyebrows on Wall Street
nonetheless. An inverted yield curve occurs when short-term bonds pay higher
interest rates than longer-term maturities. Most importantly, the unusual event
has foreshadowed the last six recessions, although not every instance of
inversion has been followed by recession. This time most experts believe it`s
merely signaling a slowdown in growth.
WILLIAM GROSS, PORTFOLIO MANAGER, PIMCO: I don`t think we`re looking at a
recession in 2006. I think what the current flat yield curve suggests is a 2
percent economy, plus or minus.
PRATT: Economists say the yield curve has flattened mostly because of
supply-demand factors. In particular, foreigners have been big buyers of longer
term U.S. Treasuries, which helps keep rates unusually low in five and 10-year
bonds. As a result, many experts are now questioning the predictive value of an
inverted yield curve. So what does all this mean for bond investors in 2006?
Some experts say it suggests lower interest rates are here to stay at both ends
of the yield curve. And with the Federal Reserve likely to stop hiking rates
sometime next year, many don`t expect big returns from bonds in `06.
ANNE BRIGLIA, SR. FIXED INCOME STRATEGIST, UBS: I think that bond yields
are going to be largely range-bound next year, fluctuating around current
levels. So that means it`s going to be kind of a coupon clipping environment
and not terribly exciting.
PRATT: Others say while there may not be rich opportunities in 2006,
there is still money to be made in the bond market, particularly if the Fed
starts cutting rates sometime toward the end of next year.
GROSS: It doesn`t suggest a substantial bull market, but it does suggest
an end to the bear market that we`ve had. And perhaps total returns, including
interest and capital gains for the year of 5 or 6 percent.
PRATT: Many experts recommend bond investors stick with mostly
short-term Treasuries in 2006. They say with bonds offering essentially the
same yield at both ends of the spectrum, they say why bother with the extra
risk. Suzanne Pratt, NIGHTLY BUSINESS REEPORT, New York.
Nightly
Business Report transcripts are available on-line post broadcast.
The program is transcribed by eMediaMillWorks. Updates may
be posted at a later date. The views of our guests and commentators
are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly
Business Report is not and should not be considered as investment
advice. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
1/19/06: One On One With Jerry Jasinowski, President of the Manufacturing Institute
SUSIE GHARIB: Our guest tonight also does not expect a recession in 2006.
Joining us now Jerry Jasinowski, president of the Manufacturing Institute. This
is the research arm of the National Association of Manufacturers, the world`s
largest industrial trade association. Hi, Jerry.
JERRY JASINOWSKI, PRESIDENT, MANUFACTURING INSTITUTE: Hi, nice to see you.
GHARIB: Nice to see you as well. So you`re not worried about a
recession. Tell us why.
JASINOWSKI: Well, I think that your earlier commentary was right on
point. What this lower yield for the long part of the curve shows is that the
global demand and global liquidity is part of the factor that`s causing interest
rates to be low. And in addition, you`ve got a slowdown that`s coming up in the
first quarter of this coming year. So it correctly reflects a slowdown, but
nothing like a recession. I think you`re going to see the economy slow to
within the range of 2.5 or so in GDP. And that`s for the obvious reasons, not
only higher interest rates, but you`ve had high energy prices and of course
you`ve had a little bit of an inventory cycle. So the slowdown happens but
that`s just the prelude to a very good year in 2006.
GHARIB: Some of the economists that I`ve been talking to have said that
businesses are going to drive growth in 2006. It`s not going to be the
consumer. Are you seeing manufacturers gearing up to expand their operations?
JASINOWSKI: I am seeing that. And I think that that`s a correct point
of view. I think that manufacturing was very strong in 2004, slowed down a bit
last year, but I think it`s going to be quite strong and I`m getting reports
that it`s going to be quite strong in 2006 in general, partly because of energy
prices coming off reconstruction associated with Katrina, but also a fairly big
push on capital investment which we haven`t seen in recent years and is now
picking up as businesses invest more in order to continue to increase
productivity. So, yes, I think business investment, business in general and I
think manufacturing, much of manufacturing will be quite prosperous in 2006.
GHARIB: Well, what`s going to drive that growth? I mean on the one hand
you`re saying that the first quarter is going to be slowing down but you also
see business being prosperous. So where`s the growth coming from?
JASINOWSKI: I think the first quarter is just part of a cycle and I
think the slowing down is good. We`ve had 10 quarters of GDP growth in excess
of 4 percent. So the slowdown is really a good thing and it also is part of
what the Fed was trying to do and the Fed is going to succeed and it`s going to
do so without having raised rates too much more than what it already has. So
rates are going to be coming down. You`re going to have global demand picking
up, energy prices are going to be falling off, the inventory cycle will be over
and you`ve got some buildup of capital investment demand that has been going on
since companies have not invested that much in capital in the last couple years.
GHARIB: Don`t mean to interrupt, but what about hiring plans? Will we
see manufacturers doing more hiring?
JASINOWSKI: Well, let me just come back and finish up the last part of
your question, Susie, which is that I think the global economy is also going to
be fairly strong and for the first time we`re going to see some improvement in
U.S. exports over imports as the dollar comes down. On the hiring front, I
think that manufacturing is now in a position where it is a productivity
powerhouse but not a powerhouse of new hires. And that`s because you`ve really
got to hold your head count fairly stable to compete in today`s environment
where you`ve got not a lot of opportunity to raise prices. So I think a couple
hundred thousand, but not a big hiring in manufacturing.
GHARIB: Sorry, we`re going to have to leave it there, but always great
talking to you, jerry.
JASINOWSKI: Nice to be with you as well.
GHARIB: We`ve been speaking with Jerry Jasinowski, president of the
Manufacturing Institute.
Nightly
Business Report transcripts are available on-line post broadcast.
The program is transcribed by eMediaMillWorks. Updates may
be posted at a later date. The views of our guests and commentators
are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly
Business Report is not and should not be considered as investment
advice. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
1/19/06: Japan's Economy May Have To Take Stock In Its Stock Market
SUSIE GHARIB: One of the best performing stock markets in the world this
year was in Japan. The move came on a burst of buying from American and other
foreign investors the likes of which have not been seen since 1999 and analysts
are bullish about next year as well. As Lucy Craft reports from Tokyo, that
optimism is based on a bullish outlook for Japan`s economy.
LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Japanese retailers have
struggled for years to make money amid punishing bouts of deflation and a flood
of new store openings. But if government projections prove true, 2006, the year
of the dog, should be, well, less of a dog for stores. Japan is now witnessing
one of its longest economic expansions since World War II. Deflation, which has
been shaving off profits and paychecks and keeping shoppers home, appears on the
verge of being vanquished at last.
RICHARD JERRAM, CHIEF ECONOMIST, MACQUARIE SECURITIES: Consumer sentiment is
reasonably good. Labor demand is very strong, job availability is the best it`s
been in 15 years, bonuses are going up the fastest they`ve been in 15 years. So
it`s not really surprising that the consumer`s feeling a little more happy.
CRAFT: Instead of exporting and using taxpayer money to spend its way
out of recession, Japan this time is relying more on households and companies to
restore an economy worth almost $5 trillion. The return of Japanese banks to
solvency and companies to profitability has been the best news in years for
share prices. The emergence of the world`s second-leading economy from over a
decade of malaise has pumped the key Nikkei index to five-year highs and
analysts see no end in sight.
TRANSLATION OF: NORIHIRO FUJITO, SR. INVESTMENT STRATEGIST, MITSUBISHI
UFJ SECURITIES: The bullish tone will continue. With a 2 percent rise in GDP,
deflation eliminated and a rise in inflation, this is an optimal situation.
CRAFT: No mistake about it, this recovery`s for real say experts. But
the steep rise in the Nikkei average, up 40 percent year-on-year has provoked
fears of irrational exuberance. Some experts warn the consumer rebound many not
be all it`s cracked up to be.
SETH SULKIN, PRESIDENT, PACIFICA MALLS: Retail sales this year have been
pretty lousy, so clothing, food, accessories, which make up the core of the
tenants that we put into our shopping centers, they`re not doing particularly
well.
CRAFT: Still-spotty retail numbers say bears, mean the recovery is still
fragile. Naysayers are also down on Japan`s growth prospects. A 2 percent rise
in real gross domestic product next year they argue, disappoints after over a
decade of stagnation. It also pales in comparison to the other economic
superpower, the U.S., which expects well over 3 percent growth next year. So
far the run-up in Tokyo stocks has been driven by overseas investors. But some
analysts say that next year Japanese institutions, especially pension funds,
will start unloading bonds to pack their portfolios with equities. Yet the
rally of 2006 will be less spectacular than that of 2005.
TRANSLATION OF: NORIHIRO FUJITO, SR. INVESTMENT STRATEGIST, MITSUBISHI
UFJ SECURITIES: A second year with a volatile rise of this year`s magnitude is
inconceivable. Stocks will go up next year, but by a more modest margin.
CRAFT: Another rally on the Tokyo stock market next year? The consensus
is, it`s practically a done deal. But with Tokyo`s pricey valuations and
relatively low dividend yields, some foreign investors in 2006 may say sayonara
to Japanese stocks. Lucy Craft, NIGHTLY BUSINESS REPORT, Tokyo.
Nightly
Business Report transcripts are available on-line post broadcast.
The program is transcribed by eMediaMillWorks. Updates may
be posted at a later date. The views of our guests and commentators
are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly
Business Report is not and should not be considered as investment
advice. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
1/19/06: "Money File"-New Year's Financial Resolutions
SUSIE GHARIB: Well, it`s that time of year again, time for New Year`s resolutions. So
tonight in the money file, some suggestions for your financial future -- just
don`t call them resolutions. Here`s Chuck Jaffe, senior columnist for
"Marketwatch."
CHUCK JAFFE, SENIOR COLUMNIST, MARKETWATCH: I hate New Year`s
resolutions. I love the idea of the New Year giving you us fresh start, a
chance to clean the slate of some bad stuff and to focus in on the fresh and the
new. But resolutions bug me. That`s because the moment a resolution is broken,
the resolve typically is gone with it. That`s why I suggest goals, concrete
targets that you can aim for and make progress towards throughout the year.
Goals are particularly important when it comes to your finances. We
have the big ones, like saving to buy a house or to pay for college, and the
smaller ones, like fully funding the Roth IRA every year. And while a
resolution to start a diet may be gone with the first cupcake, a goal of
increasing your automatic retirement savings lingers for the entire year. If
you don`t go to the personnel department to increase your set-aside next week,
you can do it next month, all the way until next year.
Here are a few goals to consider for 2006. Save your next pay raise or
as much of it as you can. How about, find eight ways to cut $500 from your
spending. If you succeed at that one, you can use the savings to fully fund
your IRA for 2006. Create one new investment account that pulls money from your
bank account each and every month. You get the idea. Make your own targets and
make them something you can achieve over time this year. If you reach these
goals, you won`t just have a happy new year, you`ll be further along on your way
towards happily ever after. I`m Chuck Jaffe.
Nightly
Business Report transcripts are available on-line post broadcast.
The program is transcribed by eMediaMillWorks. Updates may
be posted at a later date. The views of our guests and commentators
are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly
Business Report is not and should not be considered as investment
advice. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
1/19/06: "Paul Kangas' Stocks In The News"
JEFF YASTINE: There was little follow through in stocks today. From
yesterday`s big declines, the Dow settled into a narrow range after rising about
40 points in opening trading. Sentiment was helped by a new report on consumer
confidence in December, which rose to its highest level in five months, but that
did little to invigorate stocks. And the Dow closed up 18.5 points at 10,796
with the NASDAQ Composite rising two points to 2228 and the S&P 500 index rising
about 1.5 to 1258 and change. Bonds ticked slightly higher and yesterday`s
yield curve inversion disappeared -- at least for now -- with the 10-year note
at 4.38 percent, yielding a fraction more than the two-year.
We`ll start things off with Lucent Technology (LU) dropping a
fraction. Today`s "Wall Street Journal" charged that Lucent`s profits from the
past few years are being driven more by credits from its over funded pension
fund, rather than actual equipment sales.
Pfizer (PFE) losing $0.03.
General Electric (GE) gaining a nickel.
And ExxonMobil (XOM) rising $0.38. A rebound in oil prices today buoying many
of the energy-related issues on the indexes.
Time Warner (TWX) falling $0.07. An analyst at Citigroup thinks the media giant
could be an attractive investment next year. It`s down nearly 10 percent as this
year winds to a close.
And here`s a look at Verizon Communications (VZ) falling $0.19.
Liberty Media (L) gaining just a fraction.
Qwest Communications (Q) losing $0.12.
Chesapeake Energy (CHK) gaining $0.72.
And JPMorgan Chase (JPM) losing $0.19.
Here`s Linens N Things (LIN) rising nearly 11 percent, more than $2.50 for the
day. Executives believe they can meet sales and profitability targets set by
Apollo management and that will allow Apollo to complete its buyout offer of $28
a share. And also, Linens N Things will proceed with a shareholder vote set for
next months.
Shares in NS Group (NSS) jumped over $2. The stocks going into the S&P small
cap 600 index. It replaces Shopco (ph) stores, which was acquired.
Shares in Sony Corp ADR (SNE) perked up $1.71. It was among the Japanese blue
chips boosting the Nikkei Index overnight to a new five-year high.
And ExpressJet Holdings (XJT) off $2.31. Continental Airlines is trimming its
lease with ExpressJet Holdings, taking back some planes because they say the
company charges too much to run them.
Now let`s look over at the NASDAQ where Google (GOOG) advanced a little over $2.
Apple Computer (AAPL) losing $0.66.
Celgene (CELG), there`s the reaction there, gaining more than $3. You heard the
news. Its Revlamid drug was approved by the FDA. Separately, Celgene is bumping
its CEO John Jackson to chairman and moving its president Saul Barer (ph) into
the chief executive role. Also Celgene announced a two for one stock split
today, so plenty of news on that stock.
Microsoft (MSFT) losing $0.07.
Cisco Systems (CSCO) rising $0.04.
Checking out Intel (INTC), it slipped $0.02.
Sandisk (SNDK) rising $0.28.
Yahoo! (YHOO) advancing by nearly the same amount.
Dell (DELL) losing $0.29.
And there`s Whole Foods Market (WFMI) gaining more than $3.50. The natural
foods grocery chain being added to the S&P 500 index. It replaces MBNA, which
was acquired by Bank of America. That change will take place on Friday after the
close of trading.
Switching to shares of Affymetrix Inc (AFFX), it jumped over $3. It makes chips
used in genetic research and testing. Pfizer and Proligen (ph) are going to use
its gene chip technology in their research and the stock is being added to the
S&P madcap 400 index.
Under Armour Inc (UARM) gaining more than $3. The athletic clothing maker
getting a write up from the Thomas Weisel (ph) brokerage, noting the popularity
of its new performance apparel with athletes. That stock came public at $13 a
share less than two months ago.
Prospect Medical Holding (PZZ) rising $1.50. It reported an 18 percent jump in
fourth quarter profits.
And finally Riviera Holdings (RIV) advancing nearly $2. A private investment
group has agreed to purchase more than 1 1/2 million shares from Riviera`s
chairman and the trust that he controls in a possible bid to acquire this Las
Vegas-based casino operator. The price of the purchases was $15 a share
according to SEC documents.
And those are our stocks in the news tonight.
Nightly
Business Report transcripts are available on-line post broadcast.
The program is transcribed by eMediaMillWorks. Updates may
be posted at a later date. The views of our guests and commentators
are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly
Business Report is not and should not be considered as investment
advice. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
01/19/06:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10880.71 +25.85 + .2
HIGH 10915.95
LOW 10852.13
NASDAQ COMP. 2301.81 +22.17 +1.0
HIGH 2311.71
LOW 2289.82
VOLUME 1,789.5
PREVIOUS 1,695.5
UP VOLUME 1,308.4
DOWN VOLUME 469.5
DOW TRANSPORTS 4234.91 +105.22 + 2.6
DOW UTILITIES 424.31 +3.48 + .8
CLOSING TICK +1001
S&P 500 1285.04 +7.11 + .6
S&P 100 582.51 +3.18 + .6
MIDCAP 400 771.48 +9.68 + 1.3
REUTERS/CRB 341.34 +2.54 + .8
NYSE COMPOSITE 8018.22 +65.21 + .8
VALUE LINE 430.13 +4.55 + 1.1
RUSSELL 2000 714.94 +11.16 + 1.6
DJW 5000 12939.22 +87.93 + .7
U.S. TREASURIES
5-YEAR NOTE 4.25%
Jan. 15,2011 99 23/32 -6/32 4.31
10-YEAR NOTE 4.50%
Nov. 15,2015 100 31/32 -11/32 4.38
30-YEAR NOTE 5.375%
Feb. 15, 2031 112 9/32 -18/32 4.55
LEHMAN BROS.
LONG BOND INDEX 1780.09 -2.54
DOW CLOSE 10880.71 +25.85 + .2
ADVANCES 2407
DECLINES 974
NEW HIGHS 238
NEW LOWS 25
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
PFE Pfizer 24.97 +.97 +4.0
AMD Advanced Micro 37.13 +2.98 +8.7
LU Lucent Tech 2.58 +.07 +2.8
GE General Electric 34.68 -.14 -.4
ELN Elan Corp Plc 14.67 -2.11 -12.6
MOT Motorola 24.35 +.74 +3.1
DIS Disney 26.24 +1.04 +4.1
EMC EMC Corp 13.71 +.35 +2.6
STX Seagate Tech 25.59 +.99 +4.0
HPQ Hewlett-Packard 32.24 +.57 +1.8
NASDAQ CLOSE 2301.81 + 22.17 + 1.0
VOLUME 2,375.0
PREVIOUS 2,347.8
ADVANCES 2095
DECLINES 943
NASDAQ ACTIVES
GOOG Google 436.45 -8.46 -1.9
AAPL Apple Computer 79.04 -3.46 -4.2
INTC Intel 22.40 -.20 -.9
EBAY eBay 46.77 +2.33 +5.2
YHOO Yahoo! 34.33 -.85 -2.4
MSFT Microsoft 27.02 +.19 +.7
CSCO Cisco Systems 19.02 +.29 +1.6
AMAT Applied Matl 19.99 +.25 +1.3
SNDK SanDisk 72.33 +1.68 +2.4
BRCM Broadcom 59.38 +1.88 +3.3
AMEX CLOSE 1821.38 + 24.34 + 1.4
INDEX SHARES
DIA DIAMONDS TRUST 108.78 +.13 +.1
QQQ NASDAQ 100 42.52 +.31 +.7
SPY S&P DEP.RECEIPTS 128.31 +.49 +.4
STOCKS IN THE NEWS
MER Merrill Lynch 72.05 +2.44 +3.5
LEH Lehman Brothers 137.49 +4.12 +3.1
BLK Blackrock 119.35 +8.45 +7.6
UNP Union Pacific 85.02 +5.02 +6.3
DHI D.R. Horton 38.86 -1.14 -2.9
MOD Modine Manufact 28.20 -4.71 -14.3
HDI Harley-Davidson 54.05 +2.56 +5.0
BGG Briggs Stratton 34.83 -4.03 -10.4
APH Amphenol 50.30 +4.81 +10.6
WNR Western Refining 18.59 +1.59 +9.4
LRCX Lam Research 43.85 +5.53 +14.4
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