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Labor Shortage From Border Policies Could Impact $1 Trillion Infrastructure Spending Program

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By now, the entire world is familiar with President Trump’s stance on border security and his infamous wall. Yet, as Trump pushes to remove illegal immigrants from the U.S. citing safety and security concerns, there’s some already noticeable results that he hadn’t planned on… As a result of Trump’s stance on illegals, more and more builders are finding themselves with a shortage of reliable labor to put up homes. As a result of the labor shortage, home prices are rising quickly

The Consequences of Labor Shortage

Whether from President Obama’s past policies or President Trump’s current policies, unemployment is currently at the lowest level it’s seen in about a decade at 4.4 percent. That means more money coming in from payroll taxes for the government and also shows signs of a healthy industry. However, one industry that isn’t rising is builders. With the exception of major cities with ongoing development projects such as New York, Chicago, LA, and Miami, contractors are seeing shortages of skilled labor positions. As a result, construction labor costs are rising an average of 4-5 percent annually, which is more than the annual rise of inflation.

Some reasons are that during the last construction downturn, many workers found other careers or simply retired, while younger people today stay away from labor positions. However, the biggest culprit looks to be President Trump’s immigration policies. More than 25% of all construction workers are immigrants, with about 20% of workers being illegal immigrants.

Watch the video from ABC News as Trump ask Congress for $1-trillion infrastructure investment:

Many of these workers rely on H-2B visas, which are temporary visas issued to workers with non-agricultural jobs. These Visas are capped at 66,000 every fiscal year, though return workers don’t count towards that number. The homeland security secretary can increase the number of visas to about 130,000. But even with that number, concerns point to the construction industry needing about another 500,000 workers to fill all open positions. Employers must advertise to American workers before hiring foreign labor under H-2B rules. And with the time it takes between applying for and receiving visas, foreign labor may not be available for weeks or even months. That delay would affect seasonal help as well as infrastructure spending, leading to higher prices remaining for businesses who rely on foreign workers. Don’t expect those prices to go down anytime soon.

Get financial adviser, Guy Cohen’s strategy on trading market’s response right here.

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13 Comments

13 Comments

  1. geneww1938

    May 8, 2017 at 11:47 AM

    I believe this is a temporary hiccup that will not truly affect our economy. As wages rise, (yes home prices will increase) some of the unemployed may come off welfare and return to work, tax revenue will increase, and social services to the aliens will decrease with the net effect being a better economy and less crime. Perhaps schools may improve by having fewer foreign students and more patriotism.

  2. Art Webb

    May 8, 2017 at 1:50 PM

    the labor market has been artificially depressed by the ready availability of cheap labor by illegals, and we have young men who were born here seeking jobs that don’t exist, this is a market adjustment, nothing more, builders will have to raise pay, then non illegals will move to the proffession, and the pay rate will stabilize at a more equitable rate, and more young men will have decent paying jobd

    • greenlantern1

      May 8, 2017 at 2:21 PM

      You do realize that Trump’s building were built with foreign labor?
      That his properties are staffed by foreigners?
      That Trump holds many visas for his businesses?
      How many construction workers does it take, to sell FAKE condos in Baja, Mexico

      • Art Webb

        May 8, 2017 at 2:54 PM

        Of course I know that, I JUST SAID the construction labor market is depressed in the US BECAUSE of cheap illegal immigrant labor
        Trump, like every other builder, is simply doing what is economically required
        In a market where everyone is paying low wages to illegals, only an utter fool would pay higher wages for the same work
        I give zero fucks about what Trump has done, along with EVERY OTHER BUILDER IN THE COUNTRY, as a result of the availability of cheap illegal immigrant labor, the fact is, a scarcity of labor in any market raises wages, and lowers unemployment, by sending people who are currently unemployed / underemployed into that field

        • greenlantern1

          May 8, 2017 at 3:32 PM

          TOTAL agreement!!
          We both agree that there is a HUGE problem!
          However; why are you buying Trump’s FAKE elixir?

          • Art Webb

            May 9, 2017 at 1:46 PM

            Why do you assume I’m buying his elixir?
            All I’m saying is the market has been artificially depressed by cheap illegal labor, and removing that will cause a market adjustment. I never said anything about Trump, you did

          • greenlantern1

            May 10, 2017 at 2:38 PM

            Isn’t Trump peddling his “cure”/
            You assume that Capitalism’s “invisible hands” will correct the problem.
            WALL STREET CLAIMS to believe in capitalism.
            It has trusts and monopolies!
            What would Adam Smith say about that?

          • Art Webb

            May 14, 2017 at 2:44 PM

            Once again, you inserted Trump into this discussion, not me. I only remarked that the presence of illegals in the market was artificially depressing the market, as it was
            Stop putting words in my mouth
            You should be questioning insttead why the ‘anti big business’ side of the political spectrum favors the retention of illegals as cheap labor, as it favored the retention of slavery not that long ago
            Capitalism, and the market, work, if left alone

          • greenlantern1

            May 14, 2017 at 5:17 PM

            In order!!
            Ever read the autobiography, NEVER AGAIN, by John Ashcroft?
            He, not Eric Holder, ordered the rescue of illegals!
            Remember when Attorney-General Janet Reno enforced our immigration laws?
            Remember Elian Gonzales?
            Where was Trump?
            President Andrew Jackson hated banks!
            Would he have selected Nicholas Biddle for his cabinet?
            WALL STREET CLAIMS to be for capitalism!
            Why were regulations necessary in the first place?

          • Art Webb

            May 15, 2017 at 2:45 PM

            In order!
            No, I haven’t
            I never accused Holder of anything
            And?
            Yes, I do, his family was menaced by jack booted thugs with fully automatic weapons, one of which was pointed directly at him in clear violation of gun safety rules, so he could be ripped from the arms of the family who loved him and be sent to a communist hellhole
            Attending to his businesses as a business man should, why should Trum have done anything about it? he had no political power, and it wasn’t his job
            Lots of people hate banks
            Dunno, don’t care
            And they aren’t?
            To avoid chaos

            Now for some of my own
            Why do you ASSUME I’m a Trump bot? At what point have a rah-cheered Trump?
            If you want to continue tilting at windmills, I guess that’s up to you, but the dragon you think you’re battling was never here

  3. greenlantern1

    May 8, 2017 at 2:15 PM

    Secure borders?
    Ever read the Zimmerman Note?
    The HUN tried to goad Mexico into attacking us!
    Why didn’t it do so then?
    Part of the reason, our doughboys went OVER THERE, was to protect us, OVER HERE!

  4. HOFFHACK

    May 8, 2017 at 3:48 PM

    Geeee! So you mean there will be good construction jobs for Americans instead of hiring a bunch of beaners? THAT BREAKS MY HEART! https://uploads.disquscdn.com/images/4ce62ded98dcea19ecfa5f8816bfe9dc291a9150a34d9512c1e67dc84b1a1296.jpg

  5. Pingback: Guy Cohen Walks you Through Where the Smart Money is in Trading Tech

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Why You Shouldn’t Expect An Increase In Job Growth

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Why You Shouldn't Expect An Increase In Job Growth

Job data from May, 2016 reflected a continuing slowdown in job growth. 

How should this new information be construed?

According to the report, there are only approximately 38,000 new jobs are available for May 2016. 

This figure was predicted by the trends of the preceding months.  

More so, this decreasing movement and activity in the job sector has alerted the Federal Reserve to proceed with caution.

But are these deflated figures a true reflection of the economic state of the country? 

The slow economic recovery seems undaunted at this stage. 

Perhaps the lessened job growth is not indicative of the potential slowing down of the economy as a whole.

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The job growth sector is not necessarily linked to the capabilities of the economic production of the country.

Some questions that can be posed in analyzing the figures are:

  • Is the slowing of job growth a deviation from what is normal under the current conditions in the economy?
  • Is the job market saturated?  And if so – is this necessarily a reflection on a predicted economic fall?
  •  Will payroll gains diminish?  There have been unchanging salary increases around the 200,000 mark since the economy recovered.  Is this about to change?

The forecasters at the Federal Reserve Bank may have to accustom themselves to this continued pattern of job growth. 

It may take a longer time to reflect the true economic situation. 

Investors can also follow suit.

As can be seen in the graph below, the fairly unimpressive up and down fluctuations of the job growth sector have taken a marked turndown:

p5.3

Looking at the graph below, one can see the jobs in the US that are showing an active profile in the job growth sector and those showing little activity and decline in numbers.

p5.4

Economists report, in polls that were taken before the June job growth reports were in, that the month is expected to show the same predicted figures as the last half of this year (2016). 

That is an average of 170,000. 

These figures are still considerably down from the ones accounted the previous year (2015) at 229,000.

It can be seen that there is a traditional pattern emerging here again today looking back in time. 

The current expansion that has been ongoing for seven years is one of the longest since the Second World War.

What is apparent in looking at the graphs below – that they show the steady rise of unemployment linked to an economic rise or fall.  

Reading the data on the first graph below, it shows that the unemployment is steadily climbing in the lead up to 2016 and in the past, that happens before an adjustment in the economy.

p5.5

The graph below shows how the upward swing in employment in the years displayed, is linked to similar buoyancy in the economy and vice versa:

p5.6

Records show that:

  • Job growth slowed in the final months of each economic expansion.
  • The middle of a recovery reflected job growth.

We are currently experiencing employment growth that is approximately half that which was shown in the months preceding for last year (2015).

It can be seen that these correlating dips occurred in the nineties and the eighties as well, looking back at the last few decades. 

The evidence collected from those two mercurial decades point out that the slowdowns in job growth lead to economy adjustments occurring after a period of rising and stability.

These are useful figures to observe after the fact. 

Even if we are at the end of game time in this particular period of economic growth and expansion, it does not mean that it will happen anytime soon.

Weak payrolls growth is not going to have an immediate impact. 

All signs are that the reports will continue to be optimistic. 

As long as the labor force remains steady, it is still a long way from reflected recessionary trends.

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11 Ways To Survive And Thrive In A Down Economy

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11 Ways To Survive And Thrive In A Down Economy

Yes, when it comes to the economy, it has been hard in the past decade, and it continues to be hard. 

Only now is the Fed seriously beginning to talk about raising interest rates again, many people are without jobs, and others face crippling debt.  

So, ideally, what do you do not just to survive, but thrive during such times?

One:  Even if the Market is Behaving Strangely, Don’t Freak Out

It is in the nature of the stock market to move up and down, sometimes quite unpredictably. 

However, that doesn’t mean that you want to sell out the second it drops. 

Here’s a small illustration:

You know how awful everyone says the stock market has been, lately? 

Well, observe the following chart of the S&P 500 for the past decade:

p5.1

See that awful canyon of a dip in 2008? 

See all the smaller, but not insignificant peaks and valleys? 

Those probably made all sorts of people very nervous at the time that they were happening.

Yet, do you observe something else? 

The right-hand side, representing the most recent months, is way higher than the left-hand side, which represents the farthest time back. 

In spite of all those peaks and valleys and truly terrible dips, the market has ultimately gone up.

It is, in fact, the tendency of the market to go up over time. 

If you sell off everything the second that times get tough, you miss out on that growth.

Joe Baker of Alcus Financial Group concurs.

He says that people get scared, ask themselves if the market is crashing and if they should shift their 401(k) over to a money market. 

The answer is no; they shouldn’t. Not unless they need the cash very, very soon—say, within a couple of years.

Most recessions last a maximum of six months before the S&P 500 begins to turn itself around. 

Only really big meltdowns last longer, and those take something more like 19 months. 

It’s still less than two years before investors have all their money back, and sometimes more.

So, don’t panic. 

Hang in there for the long haul, and you’re quite likely to turn a profit.

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Two:  When You Can’t Afford Something, Don’t Buy It

This one is a tall order for everybody. 

There’s always something we want that we really can’t afford to buy right now, credit cards notwithstanding. 

It might be a Jaguar, or an expensive designer dress, or that miniatures army of Chaos Space Marines.

Whatever it is—and it can be different things for different people—there is only really one answer to handling the situation. 

Don’t buy it.  It’s the hardest thing to do, especially when you’ve got more than enough credit available to do it, but still say no and don’t buy it.

Your future self will thank you for your self-control.

Three: Ask Yourself if You Can Pay Cash, and if You Can’t, Don’t Buy It.

Our society penalizes people for having no credit—your credit score goes into whether you can rent a house, how much you’re charged for a cellular phone account, and sometimes even whether you can get a particular job. 

So it sounds like odd advice in this culture, but if you can’t afford to pay cash for something, you really can’t afford to pay credit for it either.

You see, there are these magical things called interest rates, and whenever you carry a debt, they kick in and eat up even more of your money than you were already spending. 

For small amounts of money this isn’t so bad, but for big debts like mortgages or auto loans, the differences can be huge. 

And don’t forget that those huge purchases devalue over time, sometimes to the point where you end up paying more than the item is worth.

Long story short; don’t buy a house or a car at a bad time just because the bank will loan you the money. 

You may well live to regret it.

Four:  Make your portfolio as idiot-proof as possible

Don’t put all your investments in the same stock.  Just don’t do it.  This is very good advice, but not that many people follow it.

Hewitt Associates found that for every five workers enrolled in a 401(k) plan, three didn’t re-balance their portfolios once between 2000 and 2004.  This is a common oversight that can lead to a skewed portfolio.

A skewed portfolio leads to greater risk for you, the investor.

Remember to take certain factors into account when diversifying.  Two of the biggies are risk tolerance and age. 

People in the 20-40 range should be investing most of their assets in equities while people in the 60-70 range can put up to half of their assets in stocks.

Also, don’t forget that when you’re playing the long game, you can take market downturns as opportunities to buy in. 

Brett Horowitz of Evensky and Katz praises those who buy low, saying that it’s looking to the future, which in fact it is, given the market’s tendency to climb over time.

Five:  Don’t Let Your Home Imprison You

It is generally agreed upon by experts that when market times get tough, it’s time for homeowners to reevaluate their mortgages. 

If you have an adjustable-rate mortgage, it is a sad fact of life that the bank is probably about to pass its financial hurt on to you by resetting your rates considerably higher. 

Refinancing to a lower, fixed-rate mortgage is the only option under those circumstances.

The problem is, like with most other credit-related endeavors—you’d better have really good credit, or it’s simply not happening.

If you do have a FICO score of at least 680, start shopping around. 

Mortgage rates have been moving up and down like an elevator, so try to locate and latch onto the best rate you can find.

It may even be better to take a slightly higher fixed rate mortgage now rather than going with an ARM that could reset to even higher. 

Unfortunately, there aren’t as many options for people whose credit is not good, and if you fit in that category, good rates may be hard to find.

Of course, mortgages are more expensive with worse credit anyway:

p5.2

As illustrated by the chart, people with lower credit scores are already paying more. 

Once ARMs get thrown in the mix, it gets really ugly. 

Dee Lee, the author of “Let’s Talk Money,” compares ARMs to horror movie monsters, and says they’re just about as safe to be around.

There are consumer groups who can help when your credit is a problem. 

The Homeownership Preservation Foundation has a 24/7 hotline, (888) 995-4673. 

The Homeowner Crisis Resource Center also has professional counselors available at (866) 557-2227.

Six:  Get That Resume Ready

Recessions don’t just threaten the economy generally. 

They can have a huge effect on your employment—or lack thereof—as well.

If you lose your job, it will be hard to get another. 

John Challenger, CEO of Challenger, Gray & Christmas, says that during recessions, corporations are playing the waiting game when it comes to hiring, and won’t want to open new locations or add employees.

And when it comes to keeping the job you have, it isn’t good enough to just work as hard as possible. 

Your job may also depend on where in the company you are employed. 

If your department is overstaffed, or you are considered support staff, you are in prime layoff territory.

The best position to be in is one that actively adds to a company’s cash flow. 

It’s also good if you know how to do a job no one else can, or take up crucial, long-term projects for your employer.

Also, pay attention to whether your boss is on the nice or naughty list with their bosses and connect with those higher up if the latter is the case.

And of course—network, network, network. 

If you do lose your job, you need somewhere to go. 

Depending on your position, it can take anywhere from two months to five months to find a new situation.

It’s a good idea to keep your resume full of successes and fully updated.

Seven:  Focus on Building Savings and Shrinking Debt

This probably seems ridiculously obvious, but it’s a good idea to reduce your bills and build up extra money. 

Not only is there the specter of unemployment in an economy like this one, but a lot of the assets that used to be able to help you out have lost value.

An emergency fund is no longer optional. 

The recommendation for how much to have in savings runs from three to six months’ worth of expenses.

Not everyone has that savings tucked away, however, especially lower-income families.

p5.3

As the chart indicates, personal savings have seriously dipped since the seventies.

So if you don’t have money set aside, start saving. 

And while you’re at it, start paying down those credit cards

According to Demos, for every ten households, six don’t pay off their entire balance every month.

The received wisdom is to pay off the most expensive of the cards first. 

And count on having higher interest rates if you become delinquent. 

Robert Hammer of R.K. Hammer, a consulting firm for bank cards, says that you generally have to pay on time for more than a year before you can ask for lower rates and reasonably hope to get them.

The exception to this rule is if losing a job is what put you behind. 

If you find new employment, ask for lower rates and see what happens. 

Hammer advises that you may get relief under those circumstances.

Eight: When You’re Already in Debt, Don’t Add to It.

There are some debts that can’t be avoided unless one is independently wealthy. 

Houses, for one thing, are very expensive items. 

But if you have to take out a mortgage on a home, don’t turn around and add a lot of credit card debt to the mix.

Keep your payments simple—and your stress down—by sticking to just the one debtor.

Budgeting is probably the best thing you can do for yourself here.  Figure out what you need and figure out what you don’t need. 

Work out how much that daily Starbucks costs you and whether you can easily cut it to save money.

If you can, and the choice is between that and starting to run up credit card debt, ditch the Starbucks and put that money into savings instead.  Speaking of which….

Nine:  Exercise a Downsizing of Your Own

Don’t buy too expensive a house, or too flashy a car, or too much jewelry. 

If anything, live slightly under your means.

Buy a house that’s less expensive than you can afford. 

Drive a car that gets you around safely but doesn’t break your budget. 

Don’t eat out all the time.

You will be astounded by how much money you can save by doing this, and how much you can put into savings, retirement, and other investments.  All it takes is the capacity to tell yourself no when it crosses your mind that you want some luxury item on impulse. 

Just the simple—yet unspeakably difficult—action of repeatedly delaying gratification.

Ten: Broaden Your Skill Set

Whether it’s learning new job skills that will earn you more at the company you already work for, or preparing for a job at a new one, gain more skills and increase your competencies. 

The more marketable skills you have, the more income you can bring in, and increased income is never a bad thing in a rotten economy. 

Some people even choose to work second jobs, however temporarily, just to pad the bank account a little.

This tip is particularly effective when combined with those regarding budgeting and debt control. 

If you already have debt, increased income can help you get rid of it. 

If you don’t, the increased income can go into savings, so that if a disaster ever happens you don’t have to go into debt to deal with it. 

The situation is win-win.

Eleven:  In the Same Vein, Look Out for Opportunities to be Entrepreneurial

Start a business that solves a problem for someone. 

Clean, fix things, landscape—do any job that requires a skill others don’t have or takes care of something no one really wants to do for themselves.  Businesses along those lines can be incredibly lucrative.

All that it takes is a little creativity, and you can come up with things people will pay you to do in no time.

Conclusion

The economy may not change anytime soon, and there isn’t much you can do to change that unfortunate fact of life. 

What you can change is what you do about living in this economy. 

By following even just some of the steps outlined above, you can give yourself a major advantage over the average person. 

Control your debt, start building your savings, and be proactive about your employment. 

Be more selective about your indulgences, delay gratification, and keep an eye out for chances to bring in extra income. 

It may not be easy, but you can still thrive, even in these tough times.

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Get Most Of Your Retirement Return With John Bogle

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Get Most Of Your Retirement Return With John Bogle

John Bogle is the former CEO, now retiree, of the Vanguard Group, an investment management company of nearly $3 trillion in capital.

He is well-respected in the investment management world, with his book “Common Sense on Mutual Funds” having been a classic bestseller.

Everyone knows that growing money in your retirement fund doesn’t happen without effort.

Keeping it sitting in a bank with low interest returns will keep it safe, but you won’t profit much from it.

If you invest in risky pursuits like micro-cap stocks, it may grow your funds quickly, but you also run the risk of losing a lot of money that way.

According to Bogle, investment in stable stocks is the key way to grow your retirement savings without a high risk of loss.

No Matter What, there is Always a Cost of Investment

All growth-oriented investment requires a cost.

Whether it is making small investments over time or putting a large chunk of money into one project, there is always the potential for loss when saving.

Compounding interest is an important aspect of why many people save, but Bogle emphasizes another concept known as the compounding cost of investment.

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Compounding Cost Can Lead to Huge Losses

Although the return on your investment may increase over time through compounding interest, it is worth considering whether the compounding costs will outweigh potential profit.

If the stock market’s overall return percentage overtakes your personal savings return, that constitutes a compounding cost and an overall loss even though you have gained something on returns.

It is not the total return that you could potentially have achieved.

What Types of Stocks You Choose Matters

In a sea of potential investment choices, deciding what type of stocks you will invest in with your retirement funds can be overwhelming.

In order to make your profits worth the risk of compounding cost, Bogle says overall owning a broad range of investment options, including bonds, stocks, and others, will generally give a good payout.

Owning a large variety cheaply is the best route for overall savings.

Owning Index Funds Is Bogle’s Most Valued Investment Strategy

If Bogle is famous for anything, it is his emphasis on index funds.

Index funds are a category of mutual fund where the investor’s portfolio generally follows or matches the market index.

A portfolio which matches something such as the S&P 500 gives wide exposure to the market as a whole, essentially guaranteeing some level of overall gain.

Why are Index Funds so Essential for Bogle?
In an Interview, Bogle once famously said that since it is so difficult and complex to “beat” the market, investors may as well try to “be” the market instead, or at least reflect its patterns well.

This is the whole idea behind index funds – trying to get a portfolio that mirrors broad market trends.

Reasons Indexing Works Better Than Many Other Strategies

Here are a few reasons indexing is a great strategy for increasing retirement returns:

  • You are letting the pros work for you
  • It is simple from the standpoint of the investor
  • It is less time-consuming and requires less research
  • You have long-term compounding of returns
  • You avoid compounding costs in the long-term

The Professionals Do the Work for You in Indexing

If you’re trying to increase your retirement returns, indexing is a great strategy according to Bogle, partly because in indexing, professionals are determining the investments.

Indexing funds are run by investors who have spent decades working with the stock money.

They have had the time and resources to research patterns in stock trends and are likely going to make better decisions than the average individual investor.

While many investors consider index funds a lazy strategy, it should be seen more as a straightforward, dependable pathway to increasing returns.

Bogle Puts More Faith In Passively-Managed Funds

Bogle believes that passively-managed funds are the most reliable way to increase returns.

There is actually data to back this up.

Passive funds such as indexing and others usually perform better by 0.5-1% every year.

This is usually because actively-managed funds are more likely to take a risk, and so have a higher average investment cost.
Avoid Overseas Investment in your Retirement Portfolio
Another thing Bogle is famous for is keeping his portfolio entirely in the United States.

Unlike most investors, he doesn’t directly invest in foreign companies, and many people cite this as a major factor in his success.

He believes investors should stick with what they know, and that the United States has the best legal protections for investors in the world.

Additionally, most domestic companies get over 50% of their gains from international profit.

This means that even when you keep your investments in the U.S., you still get a wide exposure to the benefits of the international market.

If you invest specifically in a foreign market, this wide exposure doesn’t always happen.

We can sum up Bogle’s advice by saying that simple is better when it comes to your retirement portfolio.

Using passively-managed funds decreases risk and effort and increases profitability.

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