Tom Kirkman

Don't sneeze. Coronavirus is a threat to oil markets and global economies

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(edited)

Don’t you love the irony of the breaking news?

33201A87-11F4-4FF9-ABCA-D0CD191B9222.jpeg

Edited by GeoSciGuy

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(edited)

The stock I bought an hour before close yesterday - Occidental - is up 2.5% in spite of the rest of the market closing down.  It's good to me. Natural gas equals electricity equals.... non-discretionary and has nothing to do with people gathering. Plus I didn't care about this week's results or this year's results.  I bought it for 3 years from now when they OWN the Permian gas production and prices are 5x what they are today. 

Edited by Anthony Okrongly

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2 hours ago, Anthony Okrongly said:

The stock I bought an hour before close yesterday - Occidental - is up 2.5% in spite of the rest of the market closing down.  It's good to me. Natural gas equals electricity equals.... non-discretionary and has nothing to do with people gathering. Plus I didn't care about this week's results or this year's results.  I bought it for 3 years from now when they OWN the Permian gas production and prices are 5x what they are today. 

Anthony, from all your many posts about the killer virus, are you sure you're going to be alive to enjoy that Oxy stock in three years?

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(edited)

9 minutes ago, Gerry Maddoux said:

Anthony, from all your many posts about the killer virus, are you sure you're going to be alive to enjoy that Oxy stock in three years?

Funny. I'm prepared.  I will probably just take the Fall off entire with my family and stay home. It will be mostly clear by this time next year, and we will have a vaccine. Prepare for the worst, hope for the best. 

Peace!

Edited by Anthony Okrongly

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2 hours ago, Anthony Okrongly said:

The stock I bought an hour before close yesterday - Occidental - is up 2.5% in spite of the rest of the market closing down.  It's good to me. Natural gas equals electricity equals.... non-discretionary and has nothing to do with people gathering. Plus I didn't care about this week's results or this year's results.  I bought it for 3 years from now when they OWN the Permian gas production and prices are 5x what they are today. 

The "Buy low-Sell high" in 3 years is optimistic. I think ya made a good investment!!

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What effect is this virus having on the ‘imported labor’ market in the Middle East?

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1 hour ago, Old-Ruffneck said:

The "Buy low-Sell high" in 3 years is optimistic. I think ya made a good investment!!

You may be right.  But not today!  Today I'm right.  At the tail end of a market collapse my invest is up by 2.5%.  I like to do things in the face of totally chaotic desperate times. I like to go for hike in the middle of a hurricane. 

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5 hours ago, GeoSciGuy said:

Don’t you love the irony of the breaking news?

33201A87-11F4-4FF9-ABCA-D0CD191B9222.jpeg

Yep and with their "healthcare" system, if they say they have one then then actually have 100 and in 2 weeks they will have 10,000. But we have our own problems in California and our own under-reporting. 

In Mexico it is called a Corona virus. 

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(edited)

On 2/27/2020 at 12:07 PM, Anthony Okrongly said:

This article has some very important information that I haven't read or heard anywhere else:

https://www.theatlantic.com/health/archive/2020/02/covid-vaccine/607000/

The article states that 40-70% of the world's population WILL CATCH Covid-19. The expert thinks that there are probably already 200 cases in the U.S. that are undetected. 

40% of the U.S. is 146 million people. Even at the FLU's mortality rate of 0.1% that's 146,000 deaths. Let's say he's off by a factor of 100.  That's 1,460,000 cases.  At the low end mortality rate of 1% for Covid-19, that's one out of 100 (1,460 dead). What does Dallas do if they have 4%-40% infection rate 240,000 - 2.4 million with a 1% mortality rate of 240 - 2,400 people.  Who will send their kid to school?

What caught my attention was the highlight wording in red.................

On 2/28/2020 at 2:38 AM, Otis11 said:

So what impact will that have? Well, first, it causes people to panic -

Would like to share a story I read somewhere regarding mass panic. One might find it odd why toilet paper rolls are on 'shelves cleaning sweep' throughout the world, but............ here;

Once upon a time...... there was a Garfield show.😳🤢😵 In this episode, Garfield, the pet of annoying (to Garfield) twins of John, was running away from home to avoid their weekend visit. 😴Garfield packed away the whole fridge, as usual, took a lift and ended up in a farm not far away. There, Garfield, found a spot at the attic, laid back, ate corns and threw the core out casually. The core hit the head of a hen which was pecking on the ground underneath the attic. The hen looked around, nothing. The hen gasped and shouted:" AAAaarrrrrgggghhh!!! 😱The sky is falling! The sky is falling!" The hen ran round and round the place where she was hit. She then felt the need to warn others. She went every place in the farm with the same message. Crowd gathered........ and panic..... [Imagine the look on Garfield]...........

image.png.094b3833cb960e8fdd46e626bfc75d6f.png

From this cartoon, we might have realized the source of panic i.e. the lack of info..... Therefore, crowd anxiety is avoidable or minimizable, shall the right info or solution is provided.

 

 

Edited by specinho
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(edited)

EVERBODY READ JOSH OWENS ARTICLE IN  oilprice.com's  leading article today printed yesterday Feb 29th!!

It tells it all about this "OVER HYPTED" Coronavirus !!

Cpt. Lauren Dowsett

How Markets And The Media Have Overhyped Coronavirus

 

Edited by Tom Kirkman
Moderator edit, added link to the article mentioned
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5 hours ago, Capt. Lauren Dowsett said:

EVERBODY READ JOSH OWENS ARTICLE IN  oilprice.com's  leading article today printed yesterday Feb 29th!!

It tells it all about this "OVER HYPTED" Coronavirus !!

Cpt. Lauren Dowsett

How Markets And The Media Have Overhyped Coronavirus

 

1582930712-o_1e270bh5r1reph7m1da17lhbgc8

This is hardly the picture of economic recovery, yes, things are improving and you are now more likely to find another car passing you by on the road that isn't a delivery tricycle from JD.com. Obviously things would improve from here as they really took out all the stops in blasting the virus away with massive disinfection of public places and mass transit, massive quarantines. But they still had 1/2 of the economy shut down if you go by coal consumption,  40% by the congestion index and their real estate sales remained at a standstill until 2 weeks ago, and construction is 1/4 of the economy. So they have now recovered to 65% by coal use measures, 75% by  the congestion measure, and 20% in real estate. That is good, but very slow.

Various levels of government and CCP ground troops are working at cross purposes and distrust of the "other" authority by one level in relationship to the next is creating a drag on recovery, not to speak of the many people holed up at home even after quarantine was lifted. Migrant workers, 160 mil permanent and 160 mil temporary are being quarantined all over again when they get to the city where their jobs are. Some of the permanent migrants that own apartments in the cities where they work have not been allowed into their homes. The Chaos is astounding. 

The economic damage is mostly from the quarantine and how they went about it. Not from the disease. 

 

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repost from elsewhere

We are at the second shale investment trough. Because of the Coronavirus quarantine debacle in China, which was the marginal source of demand growth for 2 decades, the prospect of further demand growth is good in the short term as a large minority of China's industry has to be duplicated outside China with major infrastructure and development. That is about 2-3 Mob/d marginal demand. This will push oil to a higher plateau and induce some resumption in Shale expansion. LNG displacement of diesel will take off during this higher oil price period. After that, oil demand will fall back to its new declining trend. Chinese oil demand will only shrink as their car market is saturated and new cars are increasingly EVs. Once PHEV and EV big trucks take to the roads, the remaining China demand will gradually shrink. 

https://www.forbes.com/sites/kenrapoza/2020/03/01/coronavirus-could-be-the-end-of-china-as-global-manufacturing-hub/#485398675298

“Our survey shows that a large majority of executives are moving or have moved portions of their operations from another country to Mexico,” says Christopher Swift, Foley partner and litigator in the firm’s Government Enforcement Defense & Investigations Practice.

The most frightening aspect of this crisis is not the short-term economic damage it is causing, but the potential long-lasting disruption to supply chains, Shehzad H. Qazi, the managing director of China Beige Book, wrote in Barron’s on Friday.

Chinese auto manufacturers and chemical plants have reported more closures than other sectors, Qazi wrote. IT workers have not returned to most firms as of last week. Shipping and logistics companies have reported higher closure rates than the national average. “The ripple effects of this severe disruption will be felt through the global auto parts, electronics, and pharmaceutical supply chains for months to come,” he wrote.

https://www.barrons.com/articles/coronavirus-hit-chinas-economy-worse-than-expected-china-beige-book-51582902867

 

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These satellite images released by NASA and the European Space Agency reveal a spectacular drop of the air pollution over China. It shows the huge economic impact the coronavirus has on industry and transportation (and potential impact on oil demand).

image.png.9736611cf6153196433ee34bedc949be.png

image.png.5581dfa2d0213a69dcc7e4ebfa3848b9.png

 

Researchers from the Chinese University of Hong Kong have estimated in 2018 that air pollution from smog-inducing ozone and fine particles was causing an average 1'100'000 premature deaths each year in China. That's 3000 deaths each day !... Air pollution kills in only one day more people that the total number of victims of the coronavirus until now (2870).

So given these numbers, we can imagine that such a drop in air pollution is probably saving more lives than the lives the virus is claiming.

Until now covid-19 has been killing around 50 persons daily in China (2870 persons in 2 months). So a 2% decrease in the number of victims of air pollution would be enough to compensate and if the decrease is more important it means that the coronavirus is indirectly saving more people than it is killing.

And if you take into account the current traffic reduction you could also consider that the 700 road fatalities occuring daily in China have significantly been reduced these days.

 

So the good news is that until now the number of people this coronavirus outbreak has saved may be higher than the number of people it has killed.

 

 

 

 

 

 

 

 

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2 hours ago, 0R0 said:

Because of the Coronavirus quarantine debacle in China, which was the marginal source of demand growth for 2 decades, the prospect of further demand growth is good in the short term as a large minority of China's industry has to be duplicated outside China with major infrastructure and development.

China’s Non-Manufacturing & Manufacturing PMIs Show to What Unfathomable Extent the Economy Has Collapsed

The charts are brutal.

By Wolf Richter for WOLF STREET.

Purchasing Managers’ Indices (PMIs) are a tally of how executives see their own company – whether business activity at their company rose or fell compared to the prior month, whether new orders rose or fell, whether they added or shed staff, etc. Executives and their companies remain unnamed. A value above 50 means expansion; a value below 50 means contraction. PMIs are an early indication of business conditions – and by extension, of the economy.

And in China, both, the PMI for the non-manufacturing sector and the PMI for the manufacturing sector, released on March 1, have collapsed to unfathomable lows, showing to what extent the measures to impede the spread of the coronavirus have shut down the economy.

Even non-manufacturing activity collapses.

The official Non-Manufacturing PMI, released by the National Bureau of Statistics, collapsed from 54.1 in January (still well into expansion mode) to a previously unthinkable low of 29.6 in February. The horizontal gray line at 50 in the chart indicates stagnation. Below 50 means contraction. Since 2007, China’s non-manufacturing sector has grown every single month. Until February:

China-official-non-manufacturing-PMI-2020-02-.png.e994c18e42b30805b3f93d16c3ee3884.png

The non-manufacturing PMI is broader than just services. It also includes the retail sector and construction. Here are some other standouts:

  • New orders plunged to 26.5, with export orders plunging to 26.8
  • Employment, which had already been in contraction in January (48.6) dropped to 37.9
  • Input prices fell to 49.3 (from 53.3)
  • Output prices fell to 43.9.
  • Confidence plunged from 59.6 in January to 40.0 in February.

Manufacturing collapses, but it’s worse than it looks.

The official China Manufacturing PMI, released by China’s National Bureau of Statistics, had already been either in the doldrums or in outright contraction for the past 14 months. In January it was at 50.0, the stagnation point. In February it collapsed to a previously unfathomable 35.7:

China-official-manufacturing-PMI-2020-02.png.6e056fd81cfda87042e6acea6bea1293.png

But it’s even worse than it looks, as the index was likely distorted to upside, due to the way a sub-index, “supplier delivery times,” is figured into the headline PMI, according to Lu Ting, chief China economist at Nomura Holdings in Hong Kong.

The headline PMI is based on a number of sub-indices. One of them is “supplier delivery times,” which accounts for 15% of the headline PMI. Normally, when supplier delivery times rise, it’s a sign of strengthening conditions in the manufacturing sector: there is a lot of demand, and suppliers are struggling to meet that demand. So longer delivery times add to the headline PMI index value.

But this time, the supplier delivery times rose because the transportation system was partially shut down, travel bans had been imposed, entire cities had been locked down, and many suppliers were shut down. With manufacturers’ supply chains cut to shreds, factories had trouble getting components and supplies.

According to Nomura’s report, if the supplier delivery times index hadn’t surged, but had remained at the same as in January, the headline PMI index would have dropped to 33.

And the sub-index for manufacturing exports orders collapsed to 28.7:

China-official-manufacturing-PMI-export-orders-2020-02.png.db7924125732146ac31f02e7daf113bd.png

This plunge in the non-manufacturing PMI and the manufacturing PMI shows the mindboggling extent to which China’s economy has been disrupted by the coronavirus-containment methods in February.

And there is something else.

Friday evening, the homepage of the English-language website of the National Bureau of Statistics of China where I normally get the PMI data was still accessible, but the page with the data for the PMIs was not accessible and showed a “502 Bad Gateway” error. And this problem persists as I’m writing this on Saturday evening (Sunday in China). This is a screenshot:

China-official-manufacturing-PMI-screens

I’m not going to over-interpret this 502 Bad Gateway issue. It’s not a rare issue on the internet. What is rare is that a major website operator, such as the Chinese government, hasn’t gotten around to fixing it after more than 24 hours!  ...

 

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6 minutes ago, Tom Kirkman said:

China’s Non-Manufacturing & Manufacturing PMIs Show to What Unfathomable Extent the Economy Has Collapsed

The charts are brutal.

By Wolf Richter for WOLF STREET.

Purchasing Managers’ Indices (PMIs) are a tally of how executives see their own company – whether business activity at their company rose or fell compared to the prior month, whether new orders rose or fell, whether they added or shed staff, etc. Executives and their companies remain unnamed. A value above 50 means expansion; a value below 50 means contraction. PMIs are an early indication of business conditions – and by extension, of the economy.

And in China, both, the PMI for the non-manufacturing sector and the PMI for the manufacturing sector, released on March 1, have collapsed to unfathomable lows, showing to what extent the measures to impede the spread of the coronavirus have shut down the economy.

Even non-manufacturing activity collapses.

The official Non-Manufacturing PMI, released by the National Bureau of Statistics, collapsed from 54.1 in January (still well into expansion mode) to a previously unthinkable low of 29.6 in February. The horizontal gray line at 50 in the chart indicates stagnation. Below 50 means contraction. Since 2007, China’s non-manufacturing sector has grown every single month. Until February:

China-official-non-manufacturing-PMI-2020-02-.png.e994c18e42b30805b3f93d16c3ee3884.png

The non-manufacturing PMI is broader than just services. It also includes the retail sector and construction. Here are some other standouts:

  • New orders plunged to 26.5, with export orders plunging to 26.8
  • Employment, which had already been in contraction in January (48.6) dropped to 37.9
  • Input prices fell to 49.3 (from 53.3)
  • Output prices fell to 43.9.
  • Confidence plunged from 59.6 in January to 40.0 in February.

Manufacturing collapses, but it’s worse than it looks.

The official China Manufacturing PMI, released by China’s National Bureau of Statistics, had already been either in the doldrums or in outright contraction for the past 14 months. In January it was at 50.0, the stagnation point. In February it collapsed to a previously unfathomable 35.7:

China-official-manufacturing-PMI-2020-02.png.6e056fd81cfda87042e6acea6bea1293.png

But it’s even worse than it looks, as the index was likely distorted to upside, due to the way a sub-index, “supplier delivery times,” is figured into the headline PMI, according to Lu Ting, chief China economist at Nomura Holdings in Hong Kong.

The headline PMI is based on a number of sub-indices. One of them is “supplier delivery times,” which accounts for 15% of the headline PMI. Normally, when supplier delivery times rise, it’s a sign of strengthening conditions in the manufacturing sector: there is a lot of demand, and suppliers are struggling to meet that demand. So longer delivery times add to the headline PMI index value.

But this time, the supplier delivery times rose because the transportation system was partially shut down, travel bans had been imposed, entire cities had been locked down, and many suppliers were shut down. With manufacturers’ supply chains cut to shreds, factories had trouble getting components and supplies.

According to Nomura’s report, if the supplier delivery times index hadn’t surged, but had remained at the same as in January, the headline PMI index would have dropped to 33.

And the sub-index for manufacturing exports orders collapsed to 28.7:

China-official-manufacturing-PMI-export-orders-2020-02.png.db7924125732146ac31f02e7daf113bd.png

This plunge in the non-manufacturing PMI and the manufacturing PMI shows the mindboggling extent to which China’s economy has been disrupted by the coronavirus-containment methods in February.

And there is something else.

Friday evening, the homepage of the English-language website of the National Bureau of Statistics of China where I normally get the PMI data was still accessible, but the page with the data for the PMIs was not accessible and showed a “502 Bad Gateway” error. And this problem persists as I’m writing this on Saturday evening (Sunday in China). This is a screenshot:

China-official-manufacturing-PMI-screens

I’m not going to over-interpret this 502 Bad Gateway issue. It’s not a rare issue on the internet. What is rare is that a major website operator, such as the Chinese government, hasn’t gotten around to fixing it after more than 24 hours!  ...

 

Horrible numbers. Reflect what we saw above. Economy went from 50% to about 65% over the course of Feb. The number of quarantined people dropped, but we don't know by how many. It peaked at 782 million on residential quarantine. So pretty much half the people. Stats show 30% are working from home rather than at the office. E.g. Court cases are being done by interactive video.  But physical location services are shut down (dining, bars, events, cinema, live entertainment, sports, cosmetics and hair salons and massage, non essential medical services moving online) logistics are not recovering from the swirl down the toilet as whatever drivers and dock and port workers do show up are being stopped going in and out of each city and at prefecture borders and provincial borders. Many ports won't let the sailors off the boat and cargo has to be parked offshore for 14 days. 

Assuming they resume "normal" by the end of April, they will have lost  25% of GDP in Q1 2020 and considering how thin new orders are still, Q2 is probably going to show at least -5% Y/Y if not worse. 

I am sure that lots of people have just started "early retirement". 

NJ port received one container ship from China last week vs. normal ~20 per day. 

 

I am guessing that the numbers are taken down so as to not spook the locals, or the webmaster is not coming to work.

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I board and train dogs.... In the space of 3 days every client that I had booked for March (except one) cancelled. The last one has not responded to my voicemail asking what their plans are. Dog boarding and training is to a large degree an extension of travel and hospitality, so it's expected.  But this isn't speculation. It's a hard reality.  NO one is traveling. Not for work, not for pleasure.  It completely stopped. 

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(edited)

11 hours ago, Guillaume Albasini said:

These satellite images released by NASA and the European Space Agency reveal a spectacular drop of the air pollution over China. It shows the huge economic impact the coronavirus has on industry and transportation (and potential impact on oil demand).

image.png.9736611cf6153196433ee34bedc949be.png

image.png.5581dfa2d0213a69dcc7e4ebfa3848b9.png

 

Researchers from the Chinese University of Hong Kong have estimated in 2018 that air pollution from smog-inducing ozone and fine particles was causing an average 1'100'000 premature deaths each year in China. That's 3000 deaths each day !... Air pollution kills in only one day more people that the total number of victims of the coronavirus until now (2870).

So given these numbers, we can imagine that such a drop in air pollution is probably saving more lives than the lives the virus is claiming.

Until now covid-19 has been killing around 50 persons daily in China (2870 persons in 2 months). So a 2% decrease in the number of victims of air pollution would be enough to compensate and if the decrease is more important it means that the coronavirus is indirectly saving more people than it is killing.

And if you take into account the current traffic reduction you could also consider that the 700 road fatalities occuring daily in China have significantly been reduced these days.

 

So the good news is that until now the number of people this coronavirus outbreak has saved may be higher than the number of people it has killed.

 

 

 

 

 

 

 

 

So from a roughnecks point of view Corona Virus 19 and any other deadly viruses that hit China is good for the Greenies.

What a conundrum for Greta now....

Virus Good, Clean Air Good, Vírus Bad!

Edited by James Regan
Greta Big problem for China now
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1 minute ago, James Regan said:

So from a roughnecks point of view Corona Virus 19 and any other deadly viruses that hit China is good for the Greenies.

What a conundrum for Greta now....

Virus Good, Clean Air Good, Vírus Bad!

Others already made memes about this more than a week ago.

kd1oj48fsxi41.thumb.jpg.37f5a365ce07225d6ccd1218c19f53cd.jpg

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Just now, Tom Kirkman said:

Others already made memes about this more than a week ago.

kd1oj48fsxi41.thumb.jpg.37f5a365ce07225d6ccd1218c19f53cd.jpg

Sorry I’ve been hoarding and training by binging on The Walking Dead , 

Thanks Tom for the memes, will use them on LinkedIn 😂😂

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A few more pandemics and we should be able to meet those Paris Agreement goals!

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2 minutes ago, James Regan said:

Sorry I’ve been hoarding and training by binging on The Walking Dead , 

Thanks Tom for the memes, will use them on LinkedIn 😂😂

How’s that haggis hoarding going in Brasil James? I always thought that was a bit of a reach...😂

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2 minutes ago, Douglas Buckland said:

A few more pandemics and we should be able to meet those Paris Agreement goals!

The people that want to reduce the global population down to no more than 500 million people should be pretty excited lately.

1 – Maintain humanity under 500,000,000 in perpetual balance with nature.

2 – Guide reproduction wisely – improving fitness and diversity.

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14 minutes ago, Douglas Buckland said:

How’s that haggis hoarding going in Brasil James? I always thought that was a bit of a reach...😂

I caught 3 they are sneaky wee buggers..

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Can you believe Brasil regional news is telling people if you have flu or gripe no need to go directly to the Doctor, wash hands and alcohol gel etc should be the big focus, but if you have symptoms wait.... 3rd world news for a health system that is about to be overloaded.

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8 hours ago, James Regan said:

Can you believe Brasil regional news is telling people if you have flu or gripe no need to go directly to the Doctor, wash hands and alcohol gel etc should be the big focus, but if you have symptoms wait.... 3rd world news for a health system that is about to be overloaded.

Isnt that basically the message the US is relaying? Unless symptoms are severe stay home and self quarantine. Same thing china fed their people. 

Meanwhile In Washington state, 6 deaths have now occurred out of 18 cases. Which is not the 2% the world claims..

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