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Economics

Drawing Further Apart: Widening Gaps in the Global Recovery

By Gita Gopinath عربي, 中文, Español, Français, 日本語, Português, Русский The global economic recovery continues, but with a widening gap between advanced economies and many emerging market and developing economies. Our latest global…

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By Gita Gopinath

عربي, 中文, Español, Français, 日本語, Português, Русский

The global economic recovery continues, but with a widening gap between advanced economies and many emerging market and developing economies. Our latest global growth forecast of 6 percent for 2021 is unchanged from the previous outlook, but the composition has changed.

The recovery is not assured until the pandemic is beaten back globally.

Growth prospects for advanced economies this year have improved by 0.5 percentage point, but this is offset exactly by a downward revision for emerging market and developing economies driven by a significant downgrade for emerging Asia. For 2022, we project global growth of 4.9 percent, up from our previous forecast of 4.4 percent. But again, underlying this is a sizeable upgrade for advanced economies, and a more modest one for emerging market and developing economies.

We estimate the pandemic has reduced per capita incomes in advanced economies by 2.8 percent a year, relative to pre-pandemic trends over 2020-2022, compared with an annual per capita loss of 6.3 percent a year for emerging market and developing economies (excluding China).

These revisions reflect to an important extent differences in pandemic developments as the delta variant takes over. Close to 40 percent of the population in advanced economies has been fully vaccinated, compared with 11 percent in emerging market economies, and a tiny fraction in low-income developing countries. Faster-than-expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of COVID-19 cases in some countries, notably India, have led to downgrades.

Divergences in policy support are a second source of the deepening divide. We are seeing continued sizable fiscal support in advanced economies with $4.6 trillion of announced pandemic related measures available in 2021 and beyond. The upward global growth revision for 2022 largely reflects anticipated additional fiscal support in the United States and from the Next Generation European Union funds.

On the other hand, in emerging market and developing economies most measures expired in 2020 and they are looking to rebuild fiscal buffers. Some emerging markets like Brazil, Hungary, Mexico, Russia, and Turkey, have also begun raising monetary policy rates to head off upward price pressures. Commodity exporters have benefited from higher-than-anticipated commodity prices.

Inflation concerns

Aftershocks from the upheaval of last year pose unique policy challenges. Pent-up demand and supply chain bottlenecks are putting upward pressure on prices. Nonetheless, in most advanced economies inflation is expected to subside to pre-pandemic ranges in 2022 for the following reasons:

First, a significant fraction of the abnormally high inflation readings is transitory, resulting from pandemic affected sectors such as travel and hospitality, and from comparison with last year’s abnormally low readings such as for commodity prices.

Second, overall employment rates remain well below pre-pandemic levels in most countries and while there has been rapid wage growth in some sectors, overall wage growth remains within normal ranges. As health metrics improve and exceptional income support measures expire, hiring difficulties in certain sectors are expected to abate and ease wage pressures.

Third, long-term inflation expectations (as measured by surveys and market-based measures) remain well-anchored, and factors such as automation that have lowered the sensitivity of prices to changes in labor market slack likely have intensified through the pandemic.

This assessment is, however, subject to significant uncertainty given the uncharted nature of this recovery. More persistent supply disruptions and sharply rising housing prices are some of the factors that could lead to persistently high inflation. Further, inflation is expected to remain elevated into 2022 in some emerging market and developing economies, related in part to continued food price pressures and currency depreciations—creating yet another divide.

While more widespread vaccine access could improve the outlook, risks on balance are tilted to the downside. The emergence of highly infectious virus variants could derail the recovery and wipe out $4.5 trillion cumulatively from global GDP by 2025. Financial conditions could also tighten abruptly amid stretched asset valuations, if there is a sudden reassessment of the monetary policy outlook, especially in the United States. It is also possible that stimulus spending in the United States could prove weaker than expected. A worsening pandemic and tightening financial conditions would inflict a double hit on emerging market and developing economies and severely set back their recoveries.

Policies to arrest divergences and improve prospects

Multilateral action is needed to ensure rapid, worldwide access to vaccines, diagnostics, and therapeutics. This would save countless lives, prevent new variants from emerging, and add trillions of dollars to global economic growth. IMF staff’s recent proposal to end the pandemic, endorsed by the World Health Organization, World Bank, and World Trade Organization, sets a goal of vaccinating at least 40 percent of the population in every country by the end of 2021 and at least 60 percent by mid-2022, alongside ensuring adequate diagnostics and therapeutics at a price of $50 billion.

To achieve these targets, at least 1 billion vaccine doses should be shared in 2021 by countries with surplus vaccines, and vaccine manufacturers should prioritize deliveries to low- and lower-middle income countries. It is important to remove trade restrictions on vaccine inputs and finished vaccines and make additional investment in regional vaccine capacity to ensure sufficient production. It is essential to also make available upfront grant financing of around $25 billion for diagnostics, therapeutics, and vaccine preparedness for low-income developing countries.

A related priority is to ensure that financially constrained economies maintain access to international liquidity. Major central banks should clearly communicate their outlook for monetary policy and ensure that inflation fears do not trigger rapid tightening of financial conditions. A general allocation of Special Drawing Rights (SDR) equivalent to $650 billion ($250 billion to emerging market and developing economies), as proposed by the IMF, should be completed quickly so as to provide liquidity buffers for countries and help them address their essential spending needs. The impact can be further magnified if rich nations voluntarily channel their SDRs to emerging market and developing economies. Finally, greater action is needed to ensure that the G20 Common Framework successfully delivers on debt restructuring for countries where debt is already unsustainable.

The other major shared challenge is to reduce carbon emissions and slow the rise in global temperatures to avoid catastrophic health and economic outcomes. A multipronged strategy with carbon pricing as its centerpiece will be needed. Revenue from carbon pricing mechanisms should be used to fund compensatory transfers to those hurt by the energy transition. In parallel, a green infrastructure push and subsidies for research into green technologies are needed to hasten the move to lower carbon dependence. So far, only 18 percent of recovery spending has been on low-carbon activities.

National level policies needed to reinforce multilateral efforts for securing the recovery

Policy efforts at the national level should continue to be tailored to the stage of the pandemic:

  • First, to escape the acute crisis by prioritizing health spending, including for vaccinations, and targeted support for affected households and firms;
  • Next, to secure the recovery with more emphasis on broader fiscal and monetary support, depending on available space, including remedial measures to reverse the loss in education, and supporting the reallocation of labor and capital to growing sectors through targeted hiring subsidies and efficient bankruptcy resolution mechanisms; and
  • Finally, to invest in the future, by advancing long-term goals of boosting productive capacity, accelerating the transition to lower carbon dependence, harnessing the benefits of digitalization, and ensuring the gains are equitably shared.

Fiscal actions should be nested within a credible medium-term fiscal framework to ensure debt remains sustainable. For many countries this will involve improving tax capacity, increasing tax progressivity, and eliminating wasteful expenditures. Low-income developing countries will also need strong international support.

Central banks should avoid prematurely tightening policies when faced with transitory inflation pressures but should be prepared to move quickly if inflation expectations show signs of de-anchoring. Emerging markets should also prepare for possibly tighter external financial conditions by lengthening debt maturities where possible and limiting the buildup of unhedged foreign currency debt.

The recovery is not assured until the pandemic is beaten back globally. Concerted, well-directed policy actions at the multilateral and national levels can make the difference between a future where all economies experience durable recoveries or one where divergences intensify, the poor get poorer, and social unrest and geopolitical tensions grow.

 

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Economics

Best Dividend Stocks In 2021? 4 To Watch This Week

Dividend stocks to know amidst debates over debt limit and choppy markets.
The post Best Dividend Stocks In 2021? 4 To Watch This Week appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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4 Dividend Stocks Worth Checking Out In A Down Market

As we begin another trading week, dividend stocks are once again at the forefront for investors. For the most part, this could be thanks to various factors, international and domestic, that are weighing on the stock market today. To begin, the market appears to be reacting to significant declines in overseas equities. The likes of which are closely linked to the possible default of a major Chinese real estate company, Evergrande. If anything, this would echo the aftermath of a recent slew of disappointing international economic data influencing the overall recovery trade now.

At the same time, investors could also be treading lightly ahead of the Federal Reserve’s September meeting. The monetary policy meeting would be the launching point for additional debate regarding the Fed’s tapering and overall economic outlook. Now, how would dividend stocks fit into all of this? Simply put, dividend stocks would be a more defensive play in the stock market now. Given the numerous factors contributing to overall volatility across the board, some consistent income in the form of dividends would be appealing.

Accordingly, companies such as Consolidated Edison (NYSE: ED) and Archer-Daniels-Midland (NYSE: ADM) would come into play. This is mostly because of their long history of dividend growth and a constant demand for their services regardless of the current economic cycle. Among the top dividend stocks now are also industry giants that boast massive operations spanning the globe. With all that said, here are four dividend stocks to note now.

Top Dividend Stocks To Buy [Or Sell] This Week

Apple Inc.

First up, we have Apple, a multinational technology company that manufactures and sells its premium line of tech products. On top of that, it also offers a wide variety of services like its Apple TV+ video-on-demand streaming service and Apple Music. Furthermore, the company is one of the world’s most valuable brands and boasts a high level of brand loyalty among its users. AAPL stock currently trades at $142.94 as of Monday’s close. Its last dividend was declared in July at  $0.22 per share.

best tech stocks (AAPL stock)

The company has just recently announced its latest lineup of iPhone models. In fact, its iPhone 13 sales have just begun and millions have already placed orders for them. The company’s lineup this year also packs the latest features like a new A15 processor and 120 Hz display screen on its Pro model.

The company’s deals are also more aggressive this year and have partnered with carriers like T-Mobile (NASDAQ: TMUS) to offer huge incentives for users to trade in their old devices and sign up for a top-shelf cellular plan. Given this exciting piece of news surrounding the company, will you consider adding AAPL stock to your watchlist right now?

[Read More] 4 Semiconductor Stocks To Watch Right Now

The 3M Company

3M is a dividend company that has businesses in consumer goods, health care, worker safety, and industrials. Its products improve lives and help solve the world’s toughest challenges. The company’s portfolio of products includes abrasives and adhesives that are used for construction and are engineered to fit its customers’ needs.

3M Stock (MMM Stock)

Its array of high-performance materials are used to meet the demands of real-world manufacturing. MMM stock currently trades $180.53 at the end of Monday’s trading session. On August 13, 2021, the company declared a dividend on the company’s common stock of $1.48 per share for the third quarter.

Last week, the company announced that it’s Industrial Adhesives and Tapes Division is evolving its Bonding Process Centers in the U.S., Germany, and China to facilitate the growing trend towards automation in manufacturing. 3M will provide a starting point from which it will design and plan automated bonding solutions. The company will also have sessions to highlight how the company’s growing capabilities can be applied to increase more positive business outcomes for manufacturing and assembly businesses. For these reasons, will you consider MMM stock a buy today?

[Read More] Best Artificial Intelligence Stocks To Buy Right Now? 5 To Watch

AbbVie Inc.

Following that, we have AbbVie, a company that develops and commercializes advanced therapies. It has over 48,000 employees globally that strive to help patients by providing them next-generation treatments and therapies. It focuses on several key therapeutic areas like immunology, oncology, neuroscience, and eye care among others. ABBV stock trades at $106.40 a share as of Monday’s close and has enjoyed gains of over 18% in the past year.

best dividend stocks (ABBV stock)

Today, the company announced that it has submitted an application to the FDA seeking approval for Risankizumab-rzaa, an interleukin-23 inhibitor for the treatment of patients 16 years and older with moderate to severe Crohn’s disease. The company submitted its safety and efficacy data from three Phase 3 studies to the FDA for this approval.

While there have been advancements in care, many people with Crohn’s disease do not achieve lasting remission,” said Tom Hudson, senior vice president of research and development, chief scientific officer, AbbVie. “This submission is an important step forward in our commitment to providing an additional treatment option for those who struggle with this debilitating and often unpredictable disease.” With that being said, will you consider adding ABBV stock to your portfolio?

[Read More] What Stocks To Buy Today? 5 Tech Stocks To Watch

Microsoft Corporation

Another name to consider among dividend stocks in the stock market today would be the Microsoft Corporation. Sure, while Microsoft is not often first on most dividend stock lists, the company is not stingy when it comes to increasing its payouts. Namely, Microsoft has and continues to steadily grow its dividends for about 11 years. Thanks to its latest dividend hike, MSFT stock could be in focus among dividend investors now. As it stands, the company’s shares currently trade at $294.30 as of Monday’s closing bell after gaining 37% year-to-date.

best tech stocks (msft stock)

In terms of its dividend, Microsoft announced that it would be boosting its dividend by a whopping 11% last week. While this adds up to a $0.06 per share quarterly payout, investors would be buying into the tech giants’ offerings as well. With pandemic conditions persisting worldwide, demand for Microsoft’s offerings could follow suit.

Even now, the company appears to be kicking into high gear across the board. Together with its dividend hike, Microsoft also plans to initiate a $60 billion share repurchase program, its largest to date. After considering all of this, would MSFT stock be worth investing in?

The post Best Dividend Stocks In 2021? 4 To Watch This Week appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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Spread & Containment

Canadian government grants your business might qualify for

  With the changes in the economy, many business owners are struggling to get a foothold on what they need to do to ensure their business is stable now and into the future. As a business coach, I’ve seen some tremendous transformations when businesses…

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With the changes in the economy, many business owners are struggling to get a foothold on what they need to do to ensure their business is stable now and into the future.

As a business coach, I’ve seen some tremendous transformations when businesses have had the opportunity to hire outside help to guide them towards increased profitability and less stress.

To support businesses, our team has come up with 24 grants that your business might qualify for in helping you take it to the next level.

FEDERAL GRANTS

Canada Job GrantThe Canada Job Grant (CJG) is a federal government funding program designed to reduce the costs of providing third-party skills training to new and existing employees. Launched in 2014, the Canada Job Grant allocates upwards of $194 million annually to support the upskilling of new and existing employees so they can learn new skills and become more valuable to their organizations.

Canada Small Business Financing ProgramThis is part of the Canada Small Business Financing Act and was created to help support business growth through business loans with competitive interest rates. Up to $1-million is available for business expansion activities, including the acquisition of a building, leasehold improvements, purchasing new or used equipment, and software components.

Strategic Innovation FundThe SIF is a federal government program uniquely targeted at Canada’s industrial and technology sectors. It offers financial contributions (both repayable and non-repayable) valued at up to 50 per cent of project costs, with the purpose of promoting investment into the types of activities that drive sustained productivity and economic benefits.

BRITISH COLUMBIA BUSINESS GRANTS

Canada-B.C. Job GrantThe B.C. Employer Training Grant program (ETG) supports skills training to address provincial labour market shortages. Reimbursement amounts vary between 60 and 100 per cent, depending on the training stream. Employers are eligible to receive up to $300,000 per fiscal year (April 1 to March 31).

Foundational Training Stream (government of Canada through the Canada-B.C. workforce development agreement): This stream supports unemployed and low-skilled British Columbians to gain essential, transferable and certified skills, in order to obtain good-paying jobs and increase job security. Under the Foundational Training Stream, employers may receive 100 per cent of eligible training costs, up to a maximum of $10,000 per participant per fiscal year.

Workforce Training stream (government of Canada through the Canada-B.C. workforce development agreement): This stream supports training relevant to the immediate needs of the business and the participant’s job. Under the Workforce Training Stream, employers may receive 60 per cent of eligible training costs, up to a maximum of $5,000 per participant per fiscal year.

Technical Training StreamThis stream supports employers to train current or new employees in technical skills in response to technological advancements. Under the Technical Training Stream, employers may receive 80 per cent of eligible training costs, up to a maximum of $10,000 per participant per fiscal year.

BUSINESS GRANTS NORTHERN BRITISH COLUMBIA

 Competitive consulting grantThe Competitiveness Consulting Rebate program provides a rebate to small and medium-sized businesses engaged in manufacturing, innovative technologies, resource processing, transportation, distribution and their first-line suppliers for external business consulting projects. Projects must focus on increased productivity, new or incremental revenues, profitability and/or job creation.

COVID-19 Recovery ProgramThis program is designed to help businesses reduce the barrier to accessing professional expertise and recover the costs of third-party consulting projects. These types of projects must focus on ways to sustain businesses during the current economic downturn. The Small Business Recovery Consulting Rebate will reimburse small and medium sized businesses (operators) for contracted consulting services.

Northern Industries Innovation FundThe NIIF program provides incremental funding to support innovation projects that increase the competitiveness of local businesses in traditional industries across northern B.C. The program is also intended to support economic diversification and/or viability of businesses to mitigate the economic impact of the pine beetle epidemic. NIIF supports applied research and development, new or improved products and services, and testing of innovative equipment or technologies to support capital investment decisions

Marketing InitiativesThe Marketing Initiatives program provides funding to support new marketing campaigns or projects that position a community or region to take advantage of opportunities that support economic vitality and diversification. These marketing projects must be new initiatives that stand alone from existing marketing activities.

GRANTS FOR WAGE SUBSIDIES

Industrial Research Assistance Program Youth Employment ProgramThis federal program helps your business create business or technology jobs for highly-skilled youth. It will pay a part of wage-related costs so you can hire young talent to work on innovation-related projects.

Venture for Canada partner opportunitiesFrom short-term support to full-time hires, this program offers a wide of programs at various costs commitment levels. It provides students and recent grads with the entrepreneurial skills today’s Canadian startups and SMEs need.

Career Ready Program – TECHNATIONFor employers within the technology sector (or related projects).

Innovate B.C. – Tech Co-op GrantsGet up to $20,000 per year in funding to hire co-op students through the Tech Co-op Grant, which is available for technology-based companies looking to grow or a non-tech company, organization or non-profit hiring for a tech role.

New Ventures B.C. – Innovator Skills Initiative GrantGet up to $10,000 per year in funding to hire students through WIL programs (not including co-op), such as internships and work placements. Eligible employers are tech companies or tech-focused non-profits hiring for a business or tech role, or a business or non-profit hiring for a tech role.

Mitacs AccelerateMitacs Accelerate pairs businesses with masters and PhD interns to overcome innovation challenges. Interns complete research and develop tools, models, technology, or solutions to support the host business’ challenges.

GRANTS FOR RESEARCH

IRAP accelerated review process (ARP): The Industrial Research Assistance Program (IRAP) offers Canadian small business grants for any company committed to internal research and development. One such program is called IRAP Accelerated Review Process (ARP), which covers as much as $50,000 towards a wide array of different projects so long as they are aimed at solving an internal technical challenge.

GRANTS FOR INDIGENOUS ENTREPRENEURS

Economic development fundParticipating First Nations can access this economic development fund that supports environmentally sound and sustainable economic development activities throughout the Great Bear Rainforest and Haida Gwaii.

Aboriginal Entrepreneurship ProgramThe Aboriginal Entrepreneurship Program (AEP) seeks to increase the number of viable businesses in Canada owned and controlled by Indigenous people. The AEP funds a broad range of entrepreneurial pursuits and aims to build capacity, reduce barriers and increase access to capital, by forging partnerships that will increase economic opportunities for First Nations, Inuit and Métis people.

Money for Indigenous Tourism Businesses in Northern Canada: If you’re working on a project to enhance tourism experiences in your region or helping the community attract more visitors, you could get a maximum $100,000 non-repayable contribution for up to 50 per cent of your project’s costs or a maximum $500,000 repayable contribution for up to 75 per cent of the costs. If you’re also a non-profit, the contribution is most likely non-repayable.

More advice for your business community

OTHER GRANTS

Canada-Alberta Job Grant (CAJG): The Canada-Alberta Job Grant (CAJG) is an Alberta government funding program that offers training grants to employers. Through the program, companies may receive non-repayable funding from the government to purchase third-party business training programs, including training for in-demand skillsets. Training is expected to improve the employability and value employees can provide; including new hires in these training sessions can also maximize your funding potential.

The Canada-Ontario Job Grant (COJG): The COJG is an Ontario government funding program that offers training grants to employers. Through the program, companies may receive non-repayable funding from the government to purchase third-party business training programs, including training for in-demand skillsets. Training is expected to improve the employability and value employees can provide; including new hires in these training sessions can also maximize your funding potential.

By Dave Fuller

Dave Fuller, MBA, is an award-winning business coach and a partner with Pivotleader Inc. Did we miss something? Email dave@pivotleader.com. 

Courtesy of Troy Media.

 

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Economics

Politicians need to practice what they preach and pay back wage subsidy

NDP, Liberals and Conservatives all helped themselves to the wage subsidy meant for struggling businesses Politicians are good at preaching, but they’re not so good at practicing what they preach. Case in point: the federal wage subsidy. Federal politicia

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NDP, Liberals and Conservatives all helped themselves to the wage subsidy meant for struggling businesses

Politicians are good at preaching, but they’re not so good at practicing what they preach. Case in point: the federal wage subsidy.

Federal politicians have been moralizing about the evils of business executives taking bonuses while collecting the pandemic wage subsidy, but their silence on their own party taking the subsidy is deafening.

At the beginning of the pandemic, the federal government rolled out a wage subsidy to help businesses keep more staff employed. Unfortunately, the rules allowed some businesses and political parties to exploit these tax dollars.

New Democratic Party Leader Jagmeet Singh wants to address part of the problem by forcing businesses that took the wage subsidies at the same time as they paid bonuses to executives to return the equivalent amount paid in bonuses. The NDP pointed out that “68 companies that paid executive bonuses and $5 billion in dividends to shareholders collected over $1 billion from the Canada Emergency Wage Subsidy.”

Liberals and Conservatives have also rightly scolded these executives. A business has every right to fatten its C-suite with its own money – just not with taxpayers’ money.

But these politicians have been less willing to point the finger at their own parties who took the wage subsidy meant for struggling businesses. The federal NDP, Liberals and Conservatives all helped themselves to the wage subsidy. Only the Bloc has kept its hand off the wage subsidies from the start.

Conservative Leader Erin O’Toole committed to repaying the money his party took.

“O’Toole believes the wage subsidy was designed to help businesses survive the economic side-effects of the COVID-19 pandemic lock-down, not to subsidize political parties,” said Conservative MP Peter Kent.

But as of mid-March, the Conservatives still hadn’t paid back the subsidy.

Last September, the Liberals said they would stop taking the wage subsidy but had no plans to pay it back. And despite all of his lecturing, Singh’s NDP still hasn’t mentioned whether they’ve paid back the subsidy.

By helping themselves to the wage subsidy, the political parties are acting like rich guys at a soup kitchen.

For starters, political parties already receive special taxpayer treatment.

Take the political contributions tax credit, for example. If you donate $100 to your local food bank, you get a federal tax credit of 15 per cent, meaning the total federal income tax you owe goes down by $15. But if you donate $100 to a federal political party, you receive a federal tax credit that saves you a whopping $75.

As of May 2020, parties benefited from $145 million over five years through the tax credit. On top of that, parties and candidates received nearly $200 million in expense reimbursements for the last three elections.

The parties weren’t starved for cash in 2020 either.

The Conservatives raised $20.7 million in 2020 and posted the best fourth quarter by any party ever. The Liberals posted their best fourth-quarter fundraising numbers and brought in $15 million last year. The NDP had an especially good year fundraising.

“Outside of that [2019] election year, 2020 marks the most the party has raised since the 2015 federal election that cost the New Democrats their official opposition status,” according to CBC.

Here’s the bottom line: political parties took the wage subsidy even though they obviously didn’t need them.

Parties were wrong to shove their snouts further into the taxpayer trough and help themselves to the wage subsidy meant to help businesses keep their employees on the payroll. But party leaders can help right past wrongs by practicing what they preach.

Politicians are right to force some businesses to pay back the wage subsidy, but they also need to show leadership and make sure their parties pay back the subsidy.

By Franco Terrazzano
Federal Director
Canadian Taxpayers Federation

Franco Terrazzano is the Federal Director of the Canadian Taxpayers Federation.

Courtesy of Troy Media.

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