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The New Post-FOMC Normal: Stocks Are Right, Bonds, Commodities, Currencies Are All Wrong

Tyler Durden's picture




 

While the S&P closed lower for the day, the dramatic save as ES (the S&P 500 e-mini) hit 1399.5 (again) pushed it all the way back to the safety of VWAP and perfectly unchanged from pre-FOMC news. Meanwhile, Gold and Silver lost around 2%, Treasuries snapped 13-15bps higher in yield and the USD ripped 0.6% higher closing pretty much at their extreme levels of the day. AAPL was unphased as the rest of the world appeared to sell any and everything on news of no more Fed liquidity in the short-term as the stock clung to its VWAP ending with new all-time highs once again. VIX, which managed to surge over 16.5% once again - above yesterday's highs - recovered all the way back to practically unchanged by the close (outperforming the small loss in stocks on the day). With Treasury yields and the USD back at one-week highs and stocks just 0.5% off their multi-year highs, it looked for a moment like equities were going to reconnect with credit's much less sanguine perspective - and indeed they covered half the difference at one point - but by the close HY and IG credit remains unchanged from Friday 3/23 while the S&P is up over 2% from then. Volume was average today but concentrated in the sell-off period of the day but we note that average trade size was very near the lowest of the year (suggesting algos using small lots to tickle us up to VWAP for the close) and some larger blocks going thru in the last few minutes as we peered above VWAP - combined with the shrug from credit, significant weakness in the major US financials, and unwinds in every other asset class - make us nervous for unhedged equity longs here - especially with European weakness now a trend and not a one-off.

After touching yesterday's lows, ES managed to surge right back up to VWAP perfectly unchanged post FOMC...

The divergence between stocks (AAPL and SPY), Interest Rates (TLT), Credit (HYG), and the USD (UUP Inverted) is plain to see...

Some of the biggest yield increases in weeks across the Treasury complex today as various levels were broken and moving averages crossed as post LTRO2 - TSYs once again pull away from stocks...

And yet credit markets remain unmoved - selling off to near multi-week lows in HY and HYG today - as IG outperformed (safety flight in spread land as rates got crushed), and yet stocks remain exuberant despite the 'cheapness' of HY and its high-beta friend HYG...

And for CONTEXT, based on the correlations that have been working for the last few days, risk assets broadly were pointing to a notably weaker equity market...

And while Treasuries moved the most on a beta-adjusted basis, commodities had their fair share of excitement  - but were notably recovering into the close - as Oil and Silver recoupled on the week and remain comfortably higher as Gold holds around $1650 down over 1% on the week so far - more than double USD's gain.

 

Stocks appear on their own once again in the hopes of a self-sustaining recovery and/or QE sooner rather than later - only time will tell but realistically, it seems odd that every other asset class trader has been shown up as a QE-hungry fool while stocks lament the wondrous macro-economic data that has blessed this nation for the last few weeks...

 

Charts: Bloomberg

 

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Tue, 04/03/2012 - 16:49 | 2314556 maxmad
maxmad's picture

The end of the rally has commenced!

Tue, 04/03/2012 - 16:50 | 2314558 nope-1004
nope-1004's picture

Good cop, bad cop continues.

 

Tue, 04/03/2012 - 16:53 | 2314565 SheepDog-One
SheepDog-One's picture

Carrot and stick, good cop/bad cop....whatever its called its all theyve got now.

Tue, 04/03/2012 - 17:33 | 2314656 Eclipse89
Eclipse89's picture

The Fed not printing in the near term could be the one-in-a-lifetime opportunity for the BOJ to print first and send the yen collapsing. Toyota wants it and Stolper too.

Tue, 04/03/2012 - 20:08 | 2315057 Freddie
Freddie's picture

Buy Apple and buy the f**king dip.

Buy the ****ing Dip

http://www.youtube.com/watch?v=jllJ-HeErjU

Tue, 04/03/2012 - 16:51 | 2314560 fonzannoon
fonzannoon's picture

No way. The fed knows the jobs number is going to miss. The fed knows earnings will suck. They know growth will slow down (just like last year) and they will be viewed as rational and all knowing for not jumping the guy and buying the hype. People will snuggle back into their warm bond funds and the qe talk will commence soon after. All will be right in the world except all will be the complete opposite.

Tue, 04/03/2012 - 16:52 | 2314563 SheepDog-One
SheepDog-One's picture

Hillarious...theres no QE 'until the economy turns sharply downwards' or whatever, yet theres still full retard stocks hardly dropped at all. And anything above DOW 9,800 was built purely on constant promises of QE3 coming. Just sickening...I'll never put a dime within reach of these criminals markets ever again.

Tue, 04/03/2012 - 16:53 | 2314566 101 years and c...
101 years and counting's picture

1370ish tomorrow.  up 5-6 points thurs before long w/e and before markets break next week.

Tue, 04/03/2012 - 17:29 | 2314651 Al Huxley
Al Huxley's picture

That's a pretty bold and high-precision forecast - care to explain where it comes from?

Tue, 04/03/2012 - 19:43 | 2315004 sun tzu
sun tzu's picture

my ass

Tue, 04/03/2012 - 16:54 | 2314567 fonzannoon
fonzannoon's picture

Sheep here is the deal. There is QE coming downturn or not. There is no way around it unless the Bernak is comfortable with the 10yr at 4.5% and the banks suffering massive losses on their treasury holdings, and the fed too...

Tue, 04/03/2012 - 17:02 | 2314579 SheepDog-One
SheepDog-One's picture

.

Tue, 04/03/2012 - 17:01 | 2314583 SheepDog-One
SheepDog-One's picture

No way is QE free money for bubble stocks coming. If you think QE saves banks, then why after all these QE's and Twists and all this bullshit are they now in WORSE trouble? 

Tue, 04/03/2012 - 17:04 | 2314591 fonzannoon
fonzannoon's picture

I completely agree. What I am saying is look at the flip side. If they late rates go up then the whole thing goes to crap. He made it clear today that inflation will continue to be muted. Yes it is the biggest joke on the planet. Unless your head is in the sand which most people's are. Besides it's all Iran's fault.

Tue, 04/03/2012 - 17:05 | 2314597 SheepDog-One
SheepDog-One's picture

What?

Tue, 04/03/2012 - 17:09 | 2314606 fonzannoon
fonzannoon's picture

QE is coming. They will blame the inflationary side effects on something else. Thats my point. Also most idiot people will believe them.

Tue, 04/03/2012 - 17:10 | 2314609 SheepDog-One
SheepDog-One's picture

Go buy it then, if youre so convinced!

Tue, 04/03/2012 - 22:02 | 2315239 Alpha Monkey
Alpha Monkey's picture

Correct me if I'm wrong, but I'm pretty certain there are ways to make ungodly profits from a falling market... if you have the right inside information.  But I'm sure with our transparent and well regulated markets, there is no way for this to happen.

Tue, 04/03/2012 - 17:11 | 2314612 SheepDog-One
SheepDog-One's picture

'Theyll blame inflation on something else'? Who gives a shit, when youre paying $6 bucks for gas and cant afford food who the media blames it on?

Tue, 04/03/2012 - 17:14 | 2314621 fonzannoon
fonzannoon's picture

It matters because unless people understand the true cause people won't direct their anger in the right place.

Tue, 04/03/2012 - 17:21 | 2314630 Manthong
Manthong's picture

So gold and silver get slammed and stay down and ES gets stick saved..

Not too obvious a maneuver, but that pattern might mean something's coming.

 

Tue, 04/03/2012 - 17:25 | 2314639 fonzannoon
fonzannoon's picture

Yeah manthong gold and silver got hammered at the belief that they will no longer consider expanding the money supply to support the fragile housing market and bailed on their intention to keep rates low. Yup. That happened.

 

Tue, 04/03/2012 - 18:52 | 2314884 ffart
ffart's picture

Well, consider if the alternative were held as a belief. We'd all be eating pitchfork sandwiches on a island made out of rotting prepper corpses in the middle of a sea of storming sheeple.

Tue, 04/03/2012 - 17:41 | 2314677 Alpha Monkey
Alpha Monkey's picture

Probably those evil arabs for cutting off oil shipments (hard to produce oil when you're being bombed to shit).  It seems like an opportunity for simple misdirection... "No, your food is going up in price because oil is going up in price.  Oil is going up in price because those stupid arabs won't give us their oil.  It has absolutely nothing to do with money printing."  Now, pump this out to every ignorant fool via the best propaganda machine ever produced and you can get a whole lot of shadow money printing with the root cause unknown to most and public discourse aimed at bombing brown people instead of the .001%.

God bless Amerika!

Tue, 04/03/2012 - 19:45 | 2315007 sun tzu
sun tzu's picture

The lamestream media and democrats will blame it on the evil oil companies

Tue, 04/03/2012 - 17:04 | 2314592 fonzannoon
fonzannoon's picture

I completely agree. What I am saying is look at the flip side. If they late rates go up then the whole thing goes to crap. He made it clear today that inflation will continue to be muted. Yes it is the biggest joke on the planet. Unless your head is in the sand which most people's are. Besides it's all Iran's fault.

Tue, 04/03/2012 - 17:07 | 2314605 SheepDog-One
SheepDog-One's picture

Hey fonzie btw go fuck yourself downvoting every post I ever write....what are you 5 years old?

Tue, 04/03/2012 - 17:10 | 2314610 fonzannoon
fonzannoon's picture

Hey sheep. I have a lot of respect for you, and what you write. I have never downvoted you, not once. You got the wrong guy. If I did not respect you I would not bother writing to you.

Tue, 04/03/2012 - 20:22 | 2315088 KickIce
KickIce's picture

The banks are fine so long as the sheep believe in fiat, Ben can create 0s and 1s all day.  The name of the game is asset accumulation and they are buying land and other assets as fast as they can, and therefore I'm sure they consider any prolonging of the fiat ponzi a huge success.  But one of these days they will let the bottom drop and buy everything they can for pennies on the dollar.  It's an old Rothschild scheme.

Government debt is an issue as is inflation.

Tue, 04/03/2012 - 17:43 | 2314680 CvlDobd
CvlDobd's picture

I agree to an extent. I think QE will be backdoor.

Also losses on treasuries w/ TNX at 4.5% do not matter to banks. They will value it at whatever they want and it will be bullish because the income is "higher". Same coupon.

Tue, 04/03/2012 - 16:57 | 2314572 CvlDobd
CvlDobd's picture

The teflon coated nature of stocks continues to impress this jaded observer. Hoperfully the Tsar will be along to put this in perspective and tell us if this is bullish or bearish for stocks. hehehe

Tue, 04/03/2012 - 16:57 | 2314574 nobusiness
nobusiness's picture

Why would the FED buy bonds when they can buy AAPL, SPY, ES, IWM, PCLN and make capital gains

Tue, 04/03/2012 - 17:05 | 2314595 fonzannoon
fonzannoon's picture

Rates can't go up. It crushes bondholders, banks and housing. They can't go up. Inflation however is allowed to exceed target levels. Thats all there is too it.

Tue, 04/03/2012 - 17:09 | 2314608 SheepDog-One
SheepDog-One's picture

Youre 100% convinced 'QE3' is right around the corner? Fine then put your money where your mouth is and BUY it!

Tue, 04/03/2012 - 17:12 | 2314613 fonzannoon
fonzannoon's picture

It's not right around the corner, everyone wants to be vindicated immediately. No one has any patience anymore to watch things play out. Everyone is a fast momey meathead. And believe me I have planned accordingly.

I disagree with you but I upvoted you.

Tue, 04/03/2012 - 17:37 | 2314669 Al Huxley
Al Huxley's picture

Totally agree with you - the FED's hands are tied because any rise in interest rates exposes the whole debt/deficit once and for all as the monstrosity that it is.  The only way they get away with it in the short term is because the interest burden is so low, even on 15 trillion.  Eventually even at .01% the interest burden will kill the game, but as long as rates are low they can keep kicking the can.

 

Tue, 04/03/2012 - 19:27 | 2314977 Yardfarmer
Yardfarmer's picture

@ SheepDogone this exchange displays the two opposite poles of experience in managing and maintaining a solid and tenable financial position in the midst of the notable psychological manipulations which make the fundamental and underlying facts of our collapsing economic underpinnings so difficult of apprehension for many. Au/Ag is not going away and neither is inflation though the obvious deflationary currents and credit contractions are for the moment holding center stage in the minds of the "fast money meatheads" lol.it seems to me that fonzannoon has correctly(and cooly) pointed out that what is needed is patience and intestinal fortitude to weather the turbulent and yet evanescent storms which periodically break over the surface of the implacable and immoveable reality of the destruction of capital which is "playing out". despite the constant efforts to skew perception with bogus statistical analyses, media spin, the manipulations of the bullion bank paper dumping and the "man behind the curtain" FOMC oracular pronouncements of the Fed, the die is cast and we should prepare accordingly. BTW, my sheep dogs, all five of them, are imperturbable. they are unswervingly committed to our protection and the welfare of the flock, and they promptly raise the alarm at the first whiff of present danger. if only vacillating and fickle human beings who often swing like weather vanes at each changing wind could be more like them. Woof!

Tue, 04/03/2012 - 19:50 | 2315016 fonzannoon
fonzannoon's picture

man that was more eloquent than I could have ever said it.

Tue, 04/03/2012 - 17:07 | 2314601 oogs66
oogs66's picture

Stock guys don't even know treasury market is open on Friday for NFP - ignorance is bliss

Tue, 04/03/2012 - 18:43 | 2314859 Sam Clemons
Sam Clemons's picture

Stock guys are pavlov's dogs.  The buy button is the default choice.  The last four month melt-up has conditioned them well.  Why would today be any different?

Tue, 04/03/2012 - 17:12 | 2314615 Fast Twitch
Fast Twitch's picture

The only way Wall Street can get the Muppets to play this time,is by putting everything on sale first...

Tue, 04/03/2012 - 17:14 | 2314618 Boilermaker
Boilermaker's picture

1,400....the new battle line to keep the public suckered.

Let me guess...that'll be declared the new 'floor' or 'resistance' and thus encouraging retail to get back in because the risk is just returning to 1,400.

Jesus Christ...this get tired.

Tue, 04/03/2012 - 17:24 | 2314637 CaptainTripps
CaptainTripps's picture

and yet SANDISK is crashing ah saying demand is falling off a cliff

 

again, people continue to ignore the news and truth

 

its the same old BUBBLE...people think they're safe in their apple

Tue, 04/03/2012 - 17:27 | 2314645 Al Huxley
Al Huxley's picture

1385 would certainly put a little fear back in the markets.

Tue, 04/03/2012 - 17:29 | 2314648 Hallpass2012
Hallpass2012's picture

I agree with fonzannoon, just having the Fed stop expanding will cause a market sell off, after operation Twist is ending & the markets realize no new QE is coming (although everyone expects QE3) it will sell off and sell hard (10%-15%+), sell into the April rally then go long volatility, as volatility spikes take that dough and get ready for more easing... I mean at some time period the whole markets will go to hell in a handbasket but I guess it is profitable to play the game in the interim

 

@SheepDog-One dude, don't take everything so personal lol - everyone has their own strategy so its your money, do what you want with it

Tue, 04/03/2012 - 17:35 | 2314664 fonzannoon
fonzannoon's picture

Thanks hallpass.

Whats amazing is I think you could do what you are saying. Or you could prob just buy the metals on this dip, and I get my head taken off for it.

As if they really are possibly deciding anfter trillions in QE here and across the world to call it quits today. Lunacy.

Tue, 04/03/2012 - 17:36 | 2314666 eddiebe
eddiebe's picture

So if the fed won't buy US debt, who will?? They'll call it Un quantitated easing with a double twist, maybe? Tomato tomayto...

Tue, 04/03/2012 - 18:46 | 2314867 Sam Clemons
Sam Clemons's picture

People who lose more holding equities will buy bonds... It is just my speculation, but I'd guess the Fed would let stocks tank before treasuries.  Treasuries fund all the Fed's minions.

Tue, 04/03/2012 - 17:39 | 2314675 fonzannoon
fonzannoon's picture

My guess is a European country hits an iceberg. Maybe S&P comes out with a serious US downgrade warning in the summer. Last year we got downgraded and treasuries rallied pre twist. Something will buy them a little time but they will eventually have another program. They should just call it operation hot dogshit at this point because it does not matter anymore.

Tue, 04/03/2012 - 17:46 | 2314689 q99x2
q99x2's picture

The bull market in stocks will continue the rest of the year

GS paid CNBC Gods have spoken.

Tue, 04/03/2012 - 17:47 | 2314695 Hallpass2012
Hallpass2012's picture

fonzannoon, yup, depends on how you want to play the QE3 announcement, I think a lot of quality mining stocks are highly undervalued so they are bargains, in fact most of em if you wanted have experienced great volatility for a while so that is good trading play... but yup, I own gold bullion...

I think the Fed is stuck as other central banks, their refinancing game is getting closer and closer to over, I don't think the Fed can manage to do a Japanese scenario plus I don't think Americans will take the inflation much longer(but who knows on that one lol) - - somewhere down the line after the Fed strategy of trying to compound an inflation rate of 10%+ but the (CPI=2%) the jig will be up & the people will force higher rates, then the Fed raises in tiny increments & everyone is scared shitless at this time, maybe 100-300bps kills the US because they can't afford the interest!!! then extreme inflation will come & everyone will want anything but USD (time frame on that, no one knows but thats the way I see it as of now)

Tue, 04/03/2012 - 17:54 | 2314706 Hallpass2012
Hallpass2012's picture

 I would also add, the extent of the addiction of credit for the US and other economies is a very dangerous path to go down. It is all politics, but the politicians should go study history... lets say the US & world becomes ever more dependent on credit expansion then when it all collapses the (fake aka inflation created) economy implodes & I think if the same policies are continued it will be highly socially destableizing & could lead to a big war... atleast history would say so, major debt crisis is a precedor to war... so economic crisis turns into a political crisis which is why I am long long range riles & ammo... someone should securitize ammo and rifles etc.

Wed, 04/04/2012 - 01:37 | 2315517 ReactionToClose...
ReactionToClosedMinds's picture

great idea ... copyright it immediately

 

The Sturm Ruger ETN ..... or 'raw VIX' ... but what is the skew?

Tue, 04/03/2012 - 17:54 | 2314707 fonzannoon
fonzannoon's picture

I could not agree more hallpass. Someone replied above that the banks would not mind the 10yr at 4.5% because they can value them at whatever they want. I don't disagree but I am lost on how the banks can continually play the mark to market game with every asset and get away with it. I think they get crushed but the other commenter is probably right.

Tue, 04/03/2012 - 18:04 | 2314748 adr
adr's picture

You could tell today was one of the Fed sponsored hedge basket buys.

Apple, Autozone, LuLu, Chipotle, Priceline all soared. Apple is a little more parabolic than the rest of those, but look at a chart of the other four since Jan 1, all identical and all moving in a perfect straight 45 degree line up.

I'm sure humans are responsible for charts that look like lines drawn by rulers, sure.

 

How many more bullshit days like this can we have. Is Priceline really going to break $800 and Chipotle $400? Seriously?

It's enough to make you stand in front of a train, or put some bread around the head of my cat.

Tue, 04/03/2012 - 20:20 | 2315084 Freddie
Freddie's picture

It's enough to make you stand in front of a train, or put some bread around the head of my cat.

Does your cat own an iPad?  If not - why not?

Tue, 04/03/2012 - 18:05 | 2314755 eddiebe
eddiebe's picture

The banks already got a pass to mark to model, and that's after all the leverage on free and or basically interest free money from the Fed and taxpayers AND derivatives.

Tue, 04/03/2012 - 18:07 | 2314759 Hallpass2012
Hallpass2012's picture

The government will allow them to not mark to market certain securites, lets say hmm MBS idk what else but all of this crap is an attemp to recap the banks - I think what really should be on peoples mind is who really is the stockholders of the Fed, I mean it is a question I think needs to be answered. Is the Fed completely a political bitch or are they loan sharking the US? no one really knows unless you can see the stockholders... Also, on the next dip, banks might be attractive for a trade... if the Fed conintues the free money policy the banks do better or atleast are percieved to be better

Tue, 04/03/2012 - 18:13 | 2314770 eddiebe
eddiebe's picture

I don't think we'll ever know who owns the fed.

Tue, 04/03/2012 - 18:17 | 2314780 Tsar Pointless
Tsar Pointless's picture

To those of you who claim further QE isn't coming, I have three things to say to you.

Bullshit. Bullshit. And bullshit.

Oh, it may take a little time - in fact, I daresay those who control the markets WANT it that way. A good shake-out of cocky longs would be a good way of bringing said further QE to fruition.

A jog down to S&P 1040 would fit the bill. By September/October is my timeline. Just in time for the huge erection.

And the S&P shoots toward 1220.

Then, look the fuck out, bitchez.

Tue, 04/03/2012 - 18:22 | 2314791 CryingBear
CryingBear's picture

So if economy improves and stocks go up, ZH loses, and if economy deteriotes so QE and stocks go up ZH loses. Unfair.

Tue, 04/03/2012 - 18:31 | 2314820 fonzannoon
fonzannoon's picture

where is gold during all of this crying bear? Stocks can go up and down in terms of gold at the same time.

Tue, 04/03/2012 - 18:39 | 2314846 CryingBear
CryingBear's picture

yeah, it can go up and down in terms of prostitution too. you know i think gold is overpriced. throughout history a whore would charge you a gold coin for a night but today a gold coin would be about 3 nights.

Tue, 04/03/2012 - 18:43 | 2314860 fonzannoon
fonzannoon's picture

So since ZH is all about gold then 3 nights means ZH wins no?

Tue, 04/03/2012 - 19:15 | 2314933 Waterfallsparkles
Waterfallsparkles's picture

I wish those Retail Muppets would hurry up and buy one share of Aapl Stock so that all of the Hedge Funds that Own 10 Million shares each can Sell.

We all know that Retail buying marks the top.  So, hurry up all of you Muppets and BUY BUY BUY.

Tue, 04/03/2012 - 21:14 | 2314951 ekm
ekm's picture

If you want to know what is happening, follow BAC, in my opinion. I've followed it every 10 min for few months already.

http://www.google.ca/finance?q=NYSE:BAC

Scroll from Dec 2011 until now. More than 100% up in 11 weeks and not allowed to drop below 9.50 (hmmmmmmmmm 9.49) for the last few weeks already.

The entity or entitites that have stuffed themselves with BAC are finding out that the suckers are not coming to unload to and are trying to keep the price up until they basically buy all BAC. No different from Bear Stearns and Lehman with MBS derivatives or MF Global with italian bonds. MFG kept buying italian bonds even on margin until JPM called the margin.

So, my call, whoever is stuffed with BAC will start the market collapse.

Tue, 04/03/2012 - 20:30 | 2315104 Everyman
Everyman's picture

This market is like walking around barefoot on a very large hot concrete slab covered in broken glass and salt.

Tue, 04/03/2012 - 21:39 | 2315203 akak
akak's picture

With all this talk of equities to the moon, I cannot help but wonder:

RobotTroll, RobotTroll, wherefore art thou RobotTroll?

Tue, 04/03/2012 - 23:12 | 2315354 Elmer Fudd
Elmer Fudd's picture

"Commodity" Bwahahahahahahahaa, thanks for the artificially low exchange rate.  God bless all you paper lovers.

Wed, 04/04/2012 - 02:56 | 2315574 Clowns on Acid
Clowns on Acid's picture

Ben and Timmy the tax cheat are spinning a lot of dishes trying to keep everything just right.

Bonds up

Equities up

Commodities down

PMS down

Bullshiite up

Honesty down

Wed, 04/04/2012 - 04:14 | 2315612 dcb
dcb's picture

I guess you have a different way of analysis, but on most days if it's a down day and you buy into the short you will get closed out adn the algo's puch back into the top of the descending channel.

almost on all occasions when you stop out on the prior days low, the algo's bump it up because that is where the masses have their stops.

 

you look it as Vwap, etc. I just see computer does, algos making sure the monetize and control the market and how it moves. why to you think channels function perfectly as trading vehicles down to pennies on 100 dollar securities.

 

You talk interesting stuff, but do the charts, things line up exactly.

this does sometimes change in very heavy volume trading.

you think that end of day ramp that almost always happens is an accident, it's the algo's putting stuff back in.  it's almost always why I tend to close my shorts towards the end of the day (when going off a weekly high) and rebuy into the short right before the close.

 

youc an go lowng and short with the leveraded funds like this very easily like a clock almost!!! the best way to max income is with sds, sso. I like uco, sco. (bigger spread for the day). one one, sell one.

heck of you can chart hourly you can almost to it on that trend all day. then get the bigger daily trend at days end.

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