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    Boeing CEO says supply chain issues are hindering 737 Max production increase

    CEO Dave Calhoun said he expects supply chain issues could persist for the next 18 months.
    Boeing is producing an average of 31 737 Max planes a month.
    Calhoun said the company wants to ensure production is stabilized before ramping up.

    An aerial view of several Boeing 737 MAX airplanes parked at King County International Airport-Boeing Field in Seattle, Washington, June 1, 2022.
    Lindsey Wasson | Reuters

    Boeing CEO Dave Calhoun on Monday said the manufacturer won’t ramp up production of its bestselling 737 Max yet because of supply chain constraints.
    The company is producing 31 of the Max planes each month on average, and Boeing will focus on stabilizing that rate before increasing output, according to Calhoun.

    “Averages don’t work very well for customers; predictability does. We have to be at 31 every month, consistently and predictability,” he told CNBC’s “Squawk Box,” speaking from the Farnborough Airshow outside of London. “We’ll get into rate increases when we get into rate increases, but the supply chain isn’t ready for it yet.”
    Calhoun spoke shortly after Boeing announced a Delta Air Lines order for at least 100 737 Max 10 planes, the airline’s first major purchase from the company in more than a decade. Deliveries are slated to begin in 2025.

    Calhoun said longer-term constraints on aircraft production are from engine makers, like General Electric and Raytheon Technologies unit Pratt & Whitney. He said that will likely persist over the next 18 months.
    Raytheon CEO Greg Hayes echoed those concerns. “It is really difficult,” he said in an interview on CNBC’s “Worldwide Exchange” earlier Monday.
    Skilled labor is the hardest thing to come by, he added: “There are a lot of things we can’t get done because we don’t have the people.”

    Hayes said he also expects the supply chain and labor shortage challenges to last into late 2023 or early 2024.
    Boeing is scheduled to report second-quarter results on July 27.

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    Goldman Sachs crushes analysts' expectations on strong bond trading results, shares rise 3%

    Second-quarter profit fell 48% to $2.79 billion, or $7.73 a share, driven by industrywide declines in investment banking revenue. Still, the results were more than a dollar higher than the average analyst estimate reported by Refinitiv.
    Revenue fell 23% to $11.86 billion, which was a full $1 billion more than analysts had expected, driven by a 55% surge in fixed income revenue.
    The bank’s fixed income operations generated $3.61 billion in revenue, topping the $2.89 billion StreetAccount estimate, on “significantly higher” trading activity in interest rates, commodities and currencies.

    Goldman Sachs on Monday posted profit and revenue that exceeded analysts’ estimates as fixed-income traders generated roughly $700 million more revenue than expected.
    Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

    Earnings per share: $7.73 vs. $6.58 expected
    Revenue: $11.86 billion vs. $10.86 billion expected

    Second-quarter profit fell 48% to $2.79 billion, or $7.73 a share, driven by industrywide declines in investment banking revenue. Still, the per share results were more than a dollar higher than the average analyst estimate reported by Refinitiv.
    Revenue fell 23% to $11.86 billion, which was a full $1 billion more than analysts had expected, driven by a 55% surge in fixed income revenue.
    The bank’s fixed income operations generated $3.61 billion in revenue, topping the $2.89 billion StreetAccount estimate. Goldman attributed the performance to “significantly higher” trading activity in interest rates, commodities and currencies. Equities revenue rose 11% to $2.86 billion, edging out the $2.68 billion StreetAccount estimate.
    Goldman shares were up about 3% in premarket trading.
    “We delivered solid results in the second quarter as clients turned to us for our expertise and execution in these challenging markets,” CEO David Solomon said in the release.

    “Despite increased volatility and uncertainty, I remain confident in our ability to navigate the environment, dynamically manage our resources and drive long-term, accretive returns for shareholders,” he said.
    Goldman tends to outperform other banks during periods of high volatility, as displayed by the firm’s strong fixed income results.
    Similar to rivals including JPMorgan Chase and Morgan Stanley who posted steep declines in second-quarter advisory revenue, Goldman said investment banking revenue dropped 41% to $2.14 billion, slightly higher than the $2.07 billion estimate. The firm blamed a sharp slowdown in equity and debt issuance in the quarter, one of the casualties of surging interest rates and declines across financial assets.
    The bank said its deals backlog shrank compared with the first quarter, which could indicate that potential mergers and IPOs are being killed instead of being pushed back into future quarters.
    Goldman also tends to benefit from rising asset prices through its various investment vehicles, and so broad declines in financial assets stung the firm in the quarter.
    Asset management revenue fell 79% from a year earlier to $1.08 billion, edging out the $924.4 million estimate. The decline came from losses in publicly traded stocks and smaller gains in private equity holdings, the bank said.
    “Macroeconomic concerns and the prolonged war in Ukraine continued to contribute to the volatility in global equity prices and wider credit spreads,” the bank noted.
    Last week, JPMorgan and Wells Fargo also posted writedowns tied to declines in loan books or equity holdings.
    Goldman’s consumer and wealth management revenue rose 25% to $2.18 billion, essentially matching analysts’ estimate, on rising management fees, credit card balances and deposits in its digital banking business.
    Goldman shares have fallen 23% this year through Friday, worse than the 16% decline of the KBW Bank Index.
    Last week, JPMorgan and Wells Fargo posted second-quarter profit declines as the banks set aside more funds for expected loan losses, while Morgan Stanley disappointed after a bigger-than-expected slowdown in investment banking. Citigroup topped expectations for revenue as it benefited from rising rates and strong trading results.

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    Bank of America revenue tops expectations as lender benefits from higher interest rates

    Bank of America earnings dropped 32% to $6.25 billion, or 73 cents a share, from a year earlier as the firm took a $523 million provision for credit losses.
    Revenue climbed 5.6% to $22.79 billion, edging out analysts’ expectations, as net interest income surged 22% to $12.4 billion on rising interest rates and loan growth.
    Shares of the lender rose 2.5% premarket trading.

    Bank of America on Monday said second-quarter results benefited from rising interest rates, but profit took a hit from about $425 million in expenses tied to regulatory matters.
    Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

    Earnings per share: 78 cents adjusted vs. 75 cents a share expected
    Revenue: $22.79 billion vs. $22.67 billion expected

    Profit dropped 32% to $6.25 billion, or 73 cents a share, from a year earlier as the firm took a $523 million provision for credit losses. A year ago, the bank had a $1.6 billion benefit as borrowers proved more creditworthy than expected.
    Excluding the impact of the regulatory expenses, the bank earned 78 cents a share, which was higher than analysts had predicted.
    Revenue climbed 5.6% to $22.79 billion, edging out analysts’ expectations, as net interest income surged 22% to $12.4 billion on rising interest rates and loan growth. That figure could climb by $900 million or $1 billion in the third quarter, CFO Alastair Borthwick told analysts Monday during a conference call.
    Shares of the lender rose 2.5% premarket trading.
    “Solid client activity across our businesses, coupled with higher interest rates, drove strong net interest income growth and allowed us to perform well in a weakened capital markets environment,” CEO Brian Moynihan said in the release.

    “Our U.S. consumer clients remained resilient with continued strong deposit balances and spending levels. Loan growth continued across our franchise and our markets teams helped clients navigate significant volatility reflecting economic uncertainty.”
    Bank of America, led by Moynihan since 2010, has enjoyed tailwinds as rising interest rates and a rebound in loan growth have boosted income. But bank stocks have been hammered this year amid concerns that high inflation will spark a recession, which would lead to higher loan defaults.
    Noninterest expenses in the quarter rose 2% from a year earlier, as the firm cited about $425 million in costs tied to regulatory matters. Roughly half of that figure was tied to fines announced last week totaling $225 million over how the bank handled unemployment benefits during the pandemic; the rest has to do with an industrywide probe into trading personnel using messaging apps.
    Similar to peers at Morgan Stanley and JPMorgan Chase, Bank of America saw investment banking fees plunge 47% to $1.1 billion, just below the $1.24 billion StreetAccount estimate.
    Fixed income trading revenue jumped 19% to $2.3 billion and equities revenue rose 2% to $1.7 billion, both essentially matching analysts’ expectations.
    Furthermore, broad declines across financial assets have begun to show up in bank results in the quarter, with Wells Fargo saying that “market conditions” forced it to post a $576 million impairment on equity holdings. JPMorgan said last week it had a $257 million writedown on bridge loans for leveraged buyout clients.
    On Monday, Bank of America cited “mark-to-market losses related to leveraged finance positions” but didn’t immediately disclose a figure for the losses. Last month, Borthwick said that the bank will likely post a $150 million writedown on its buyout loans.
    Bank of America shares have fallen 28% this year through Friday, worse than the 16% decline of the KBW Bank Index.
    Last week, JPMorgan and Wells Fargo posted second-quarter profit declines as the banks set aside more funds for expected loan losses, while Morgan Stanley disappointed after a bigger-than-expected slowdown in investment banking. Citigroup topped expectations for revenue as it benefited from rising rates and strong trading results.
    This story is developing. Please check back for updates.

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    Delta buys 100 Boeing Max planes, its first major order with the manufacturer in more than a decade

    The deal is for 100 737 Max 10 planes, with options for 30 more.
    Deliveries are slated to begin in 2025.
    It’s Delta first fresh order for new Boeing planes in more than a decade.
    The more fuel-efficient Max planes will replace older Delta narrow-body jets.

    Delta Air Lines planes at John F. Kennedy Airport in New York.
    Getty Images

    Delta Air Lines is buying 100 Boeing 737 Max 10 planes, its first major order for new aircraft from the U.S. manufacturer in more than a decade.
    The deal has options for 30 more of the planes. Deliveries are slated to begin in 2025.

    The new order is good news for Boeing as Airbus recently won high-profile sales, including to several of China’s state-owned airlines. Boeing lamented trade tensions when that order was announced.
    The order is worth $13.5 billion at list prices but discounts are common, especially for large sales. Delta didn’t disclose how much it paid but said the sale wouldn’t change its latest capital expenditure forecast.
    Delta said Monday that the order will modernize its narrow-body fleet as the carrier seeks to capitalize on a rebound in travel following the record slump caused by the Covid pandemic. It said the Max planes will be 20%-30% more fuel-efficient than the jetliners they will replace.
    Atlanta-based Delta is the only one of the top four U.S. carriers that hasn’t ordered new Boeing jets in recent years, favoring Airbus as it beefed up both its narrow-body and longer-range wide-body fleet. Delta retired older Boeing 777s during the pandemic and has been taking more deliveries of Airbus A350 twin-aisle planes.
    The 737 Max was grounded for at least 18 months after the second of two fatal crashes in 2018 and 2019 together killed 346 people. The U.S. lifted the grounding in November 2020. Delta’s competitors over that period faced capacity constraints because deliveries of new Maxes were paused.

    The Max 10 model is the largest of the narrow-body Max family and doesn’t yet have government approval. Boeing hopes to win approval for the planes before the end of the year, ahead of regulation passed in the wake of the two crashes that will require new planes to be outfitted with a cockpit alert system going into effect, though lawmakers could provide Boeing with a waiver.
    “We have to make our case and it has to be persuasive, and we believe it is,” Boeing CEO Dave Calhoun told CNBC’s “Squawk Box” on Monday.
    Delta said it expects the FAA to sign off on the planes next year.
    Delta’s CEO, Ed Bastian, had previously hinted at an order for Max planes. When asked at a recent investor conference about a potential order of the narrow-body planes, Bastian said, “We’ve been trying to get a deal done with Boeing on that … hopefully we’ll be able to figure that out.”
    Delta will configure the plane with 182 seats: 129 in standard economy, 33 in Comfort+ with extra legroom and 20 in first class.
    Boeing shares were up close to 4% in premarket trading, while Delta shares rose more than 2%.
    Most of Delta’s new orders in recent years came from Europe’s Airbus.
    In 2017, Delta was in the middle of a trade dispute between Boeing and Canada’s Bombardier, the then-producer of C-Series narrow-body planes, which Delta ordered. Boeing alleged Bombardier was selling the planes below cost, a case it eventually lost. Airbus later took over the program, renaming the planes the A220.

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    How small businesses are fighting inflation and fear of a recession

    SMALL BUSINESS PLAYBOOK 2022
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    Isabel Garcia Nevett, on the right, owns Gracia Nevett Chocolates in Miami with her sister, Susana Garcia Nevett. The pair is making adjustments to the business in preparation of a possible recession.
    Source: Isabel Garcia Nevett

    Isabel Garcia Nevett is once again making adjustments to her business. 
    After navigating the pandemic and dealing with rising inflation, she’s now thinking about how her Miami-based chocolatier, Garcia Nevett Chocolates, can weather a possible recession. 

    With growth for her small business linked to corporate gift giving, she’s worried about cuts in spending. 
    “All those companies that we are hoping to do business with will be revising their budgets and won’t be doing as much, and that will affect us directly,” said Garcia Nevett, who owns the chocolatier with her sister, Susana Garcia Nevett.
    To address these concerns, the sisters plan to offer some less expensive options to both their corporate clients and retail clients in their shop. They are also looking at new vendors and suppliers for their packaging and comparing prices, availability and quality. 
    Buying a higher quantity of chocolate and supplies is another way they are lowering their costs. To increase foot traffic, the business is launching a coffee menu in the shop. 
    Garcia Nevett is not alone in her fears about an economic downturn. 

    Fully 93% of small business owners are worried about the U.S. economy experiencing a recession in the next 12 months, a survey by Goldman Sachs. The poll of 1,533 Goldman Sachs 10,000 Small Business Voice participants was conducted by Babson College and David Binder Research from June 20-23, 2022.   
    In addition, 38% of respondents have seen a decline in customer demand as a result of inflationary price increases on goods and services.
    “What we have found is that small businesses are at the tip of the spear of economic cycles,” said Joe Wall, national director of Goldman Sachs 10,000 Small Businesses Voices.
    In other words, they spot economic trends before a lot of others do. 
    “They don’t see an end in sight in terms of things getting better,” Wall said. 
    An earlier CNBC|SurveyMonkey Small Business Survey from May found the vast majority of small business owners preparing for a recession.
    Combating inflation
    The past several months have brought higher prices on just about everything. Consumer prices jumped 9.1% year over year in June, while wholesale prices shot up 11.3%.  
    Some 75% of small business owners said that inflation negatively impacted the health of their business in the Goldman survey. Of those, 62% increased wages in relation to inflation to retain employees and 43% sought new vendors or suppliers to reduce costs 
    They’ve also had to pass along high prices to their customers. However, small business owners are walking a tight line between dealing with their own rising costs and keeping their customers, with 53% raising prices by less than 10%. 
    That’s what Garcia Nevett reluctantly did when faced with higher costs, and she found her customers were understanding. 
    Now she’s holding her breath to see how the rest of the year goes. She’s even put plans for a larger kitchen on hold. 
    “We want to see how the holiday season is going to be,” Garcia Nevett said.  “It is hard nowadays to really plan for the long term.”
    Turning to Congress
    Garcia Nevett is among the small business owners who are meeting with lawmakers this week during the Goldman Sachs 10,000 Small Business Summit in Washington, D.C. 
    They plan to advocate for solutions to the challenges they are facing and ask them to reauthorize the Small Business Administration for the first time in over two decades. 
    “It is long overdue for the government to modernize the policy infrastructure that supports small businesses,” Wall said. 
    Through it all, business owners remain hopeful. 
    While 78% said the economy has gotten worse in the past three months, 65% are optimistic about the financial trajectory of their business this year.
    “The raw resiliency of the small business community is nothing short of remarkable,” Wall said. “They are arguably the most creative gene pool in the country, being able to pivot at moment’s notice and weather the storm.” More

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    Stocks making the biggest moves in the premarket: Goldman Sachs, Synchrony Financial, Coinbase and more

    Take a look at some of the biggest movers in the premarket:
    Goldman Sachs (GS) – Goldman gained 2.6% in premarket trading, following upbeat profit and revenue. Second-quarter earnings came in at $7.73 per share, compared to a consensus estimate of $6.58 a share. Goldman’s profit dropped from a year ago, however, as the pace of dealmaking slowed.

    Synchrony Financial (SYF) – The financial services company’s stock rallied 3.5% in the premarket after it reported better-than-expected profit and revenue for the second quarter. Synchrony pointed to upbeat loan growth and credit trends, with the consumers remaining strong.
    Coinbase (COIN) – Coinbase rallied 6.5% in premarket action, with the cryptocurrency exchange operator’s stock one of several crypto-related stocks rising after the value of bitcoin and ether surged in overnight trading.
    Bank of America (BAC) – Bank of America fell 2 cents a share shy of estimates with quarterly earnings of 73 cents per share, though revenue came in slightly above Wall Street forecasts. Bank of America’s results were impacted by a sharp drop in investment banking revenue. The stock initially fell 1.7% in the premarket but then pared those losses.
    Twitter (TWTR) – Elon Musk filed a court motion late Friday seeking to deny Twitter’s request for an expedited trial over his move to terminate his $44 billion takeover deal.
    Boeing (BA) – Boeing announced that Delta Air Lines (DAL) had ordered 100 Boeing 737 Max jets, and also said that the company was very close to resuming deliveries of its 787 Dreamliner. Boeing jumped 4.2% in premarket trading.

    Seagen (SGEN) – The closing of Merck’s (MRK) $40 billion deal to buy Seagen will be delayed, according to people familiar with the matter who spoke to The Wall Street Journal. The delay stems from a wait for data evaluating a study of a Seagen treatment. The stock slid 2.9% in the premarket.
    Starbucks (SBUX) – Starbucks rose 1.% in the premarket after the Sunday Times reported that the coffee chain is exploring a possible sale of its U.K. operations.
    GlaxoSmithKline (GSK) – The company formerly known as GlaxoSmithKline completed the spin-off of its consumer health business into a separate company known as Haleon, which contains well-known brands such as Advil and Sensodyne. GSK fell 1.3% in the premarket.
    Paramount Global (PARA) – The media company’s stock lost 1.8% in premarket trading after Morgan Stanley downgraded it to “underweight” from “equal-weight,” noting the possibility of advertisers and consumers pulling back in a recession scenario.
    Fresh Del Monte Produce (FDP) – The fruit and vegetable company’s stock rose 2.8% in premarket trading after Bloomberg reported that private-equity firm I Squared Capital is considering a takeover, as one option to expand a partnership agreement struck in 2021.

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    Crypto exchange Binance fined $3.4 million by Dutch central bank for operating illegally

    Binance has been fined 3.3 million euros ($3.4 million) fine by the Dutch central bank.
    The regulator had warned last year that Binance was offering its services in the Netherlands without authorization.
    The development goes against Binance’s recent shift in tone around making peace with global regulators.

    The logo of cryptocurrency exchange Binance displayed on a smartphone with stock market percentages in the background.
    Omar Marques | SOPA Images | LightRocket via Getty Images

    Binance, the world’s largest cryptocurrency exchange, on Monday was slapped with a 3.3 million euro ($3.4 million) fine from the Dutch central bank for operating in the Netherlands without registration.
    The penalty came after an August 2021 warning from De Nederlandsche Bank (DNB) last year that Binance had offered crypto services in the country without authorization.

    The company was dealt a category 3 fine — the most stringent of DNB’s three levels of enforcement. The charge came in at the upper limit of the 2 million euros to 4 million euros maximum the bank can impose “due to the gravity and degree of culpability of the non-compliance,” DNB said in a statement.
    The breach took place over a “prolonged period,” the central bank said, spanning from May 21, 2020, until at least Dec. 1, 2021. “This is why DNB considers the non-compliance to be very grave,” the regulator said.
    DNB said it also took into account Binance’s size and “very substantial customer base in the Netherlands.” The company is the biggest crypto exchange globally, with daily spot trading volumes of $15.5 billion, according to CoinGecko data.
    Binance filed an appeal against the fine on June 2, DNB said.
    A Binance spokesperson said the company is hoping to put the squabble behind it as it pursues its Dutch license.

    “Today’s decision marks a long-awaited pivot in our ongoing collaboration with the Dutch Central Bank,” the spokesperson said via email.
    “While we do not share the same view on every aspect of the decision, we deeply respect the authority and professionalism of Dutch regulators to enforce regulations as they see fit.”
    The development goes against Binance’s recent shift in tone around making peace with global regulators. Binance previously operated largely outside the parameters of the law, with its CEO Changpeng Zhao often boasting of having no official global headquarters.
    It has since tried to become a friend rather than foe to regulators — particularly in Europe, where it has secured licenses in France, Italy and Spain.
    The Dutch fine was moderated 5% lower because Binance applied for registration and was “relatively transparent” about its operations during the process, DNB said. The central bank says it is still reviewing Binance’s application.

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    UK braces for hottest day on record with highs of 106 degrees Fahrenheit expected

    The U.K. is bracing for the hottest day on record Monday, with highs of 41 degrees Celsius (106F) expected.
    The Met Office, Britain’s weather service, issued a red extreme heat warning for Monday and Tuesday — the country’s first-ever such warning.
    Brits have been urged to stay at home and avoid any unnecessary travel.

    The U.K. is bracing for the hottest day on record Monday, with highs of 41 degrees Celsius (106F) expected.
    Hollie Adams | Getty Images News | Getty Images

    LONDON — The U.K. is bracing for the hottest day on record Monday, with highs of 41 degrees Celsius (106F) expected in the south of England.
    The Met Office, Britain’s weather service, issued a red extreme heat warning on Monday and Tuesday for parts of central, northern, eastern and southeastern England.

    It marks the country’s first-ever such warning for exceptional heat.
    High temperatures are also forecast across the U.K., with amber warnings issued for the rest of England, Wales, and parts of Scotland.
    The U.K. Health Security Agency issued a level four warning for England, reminding people to take precautions, including staying indoors and drinking plenty of water.
    “Exceptional, perhaps record-breaking temperatures are likely early next week,” Met Office chief meteorologist Paul Gundersen said Friday, putting the odds of reaching a new high at 80%.

    Record-breaking highs

    The current record high temperature in the U.K. is 38.7°C, which was reached in Cambridge, eastern England, on July 25, 2019.

    London is set to bear the brunt of this week’s hot weather, with the capital forecast to be one of the hottest places on the world Monday.
    Temperatures in the city are expected to exceed 40 degrees by Monday afternoon, surpassing Kingston, Jamaica (33C), Texas (37C) and most of Europe, itself in the midst of a heatwave.
    The hot weather is set to continue into Tuesday, with overnight temperatures likely to be in the mid-twenties, before cooling on Wednesday.
    It comes as climate activists warn of rising global temperatures from greenhouse gas emissions. Average world temperatures have risen by just over 1C from their pre-industrial levels, and are set to rise by 2.4C to 4C by the end of the century, depending on global efforts to cut CO2 emissions.

    A hit to businesses

    Britain is unused to such extreme temperatures, with the Met Office warning that the heat is set to have “widespread impacts on people and infrastructure.” The vast majority of homes in the U.K. don’t have air conditioning units.
    Some schools plan to close early, or not open at all, and the country’s main rail network has urged people to only travel “if absolutely necessary,” with several cancellations announced and speed restrictions already in place.
    The hot weather is expected to take its toll on businesses too, with analysts predicting at drop off in retail sales as shoppers opt to remain indoors.
    “The sweltering conditions in the U.K. — where temperatures are set to reach record level highs — will have an impact on retail footfall and travel, with many shoppers choosing to stay at home and keep out of the heat,” Walid Koudmani, chief market analyst at financial brokerage XTB, said in a research note.
    It is an already challenging time for businesses, and particularly those dependent on customer footfall, as many face the twin pressures of super high inflation and an escalating cost-of-living crisis.
    Still, Koudmani said the overall impact of the heatwave on the U.K. economy is likely to be minimal given the existing precedent for people to work from home as part of their weekly routines.
    “After returning to economic growth in May, where the U.K. economy grew by 0.5%, this will be welcome to see,” he added.

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