27/07/2016 BBC Business Live


27/07/2016

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His is Business Live from BBC News with Ben Thompson

:00:10.:00:12.

Charging into the future as Tesla goes ga-ga for giga.

:00:13.:00:15.

The electric car pioneer will shortly open its $5 billion

:00:16.:00:18.

So the question is - are we now on the edge

:00:19.:00:22.

Live from London, that's the story we're getting

:00:23.:00:28.

electrified about today on the 27th of July.

:00:29.:00:46.

Powering the future - we get a sneaky peaky

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inside this massive building, Telsa's new $5 billion giga-factory.

:00:50.:00:54.

It's going to make hundreds of thousands of batteries

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and could even help to change the way you power your home.

:00:58.:00:59.

Also in the programme Germany's biggest bank -

:01:00.:01:01.

Deutsche Bank - has posted a proft, but only just.

:01:02.:01:04.

The banking giant made 20 million euros for the second

:01:05.:01:06.

quarter, 796 million for the same period last year.

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For those that are quick with their maths that's a 97%

:01:10.:01:12.

Also in the programme - do you ever get the feeling

:01:13.:01:24.

you could be doing something more worthwhile

:01:25.:01:26.

Later, we'll speak to a man who left his job as a global

:01:27.:01:30.

director at the technology giant Ericsson to become a minister

:01:31.:01:32.

As Hillary Clinton becomes the first female nomination for president, we

:01:33.:01:45.

want to know if there are any other glass ceilings you would want to see

:01:46.:01:50.

women break through. You can contact us.

:01:51.:01:57.

It might sound like something from a science fiction movie,

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but this week the Giga factory was unvailed.

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The gigantic building will produce batteries for electric car pioneer

:02:07.:02:08.

It will produce parts for the range of cars and home energy storage

:02:09.:02:16.

Currently only 16% of the final factory is finished and operational.

:02:17.:02:23.

The completed structure will have the world's

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largest footprint at 5.8 million square feet.

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You could fit around 100 football fields inside it and it's longer

:02:32.:02:33.

than the height of the Burj Khalifa - that's the world's

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Tesla says the $5 billion factory will help it cut battery

:02:37.:02:45.

The company needs the factory to produce batteries

:02:46.:02:51.

for the half-million electric vehicles that it's hoping to be

:02:52.:02:54.

But those lofty ambitions are still some way off.

:02:55.:03:00.

Tesla delivered just 50,580 vehicles last year.

:03:01.:03:05.

The company has also never made a profit,

:03:06.:03:09.

reporting a net loss of $889 million last year.

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However if they can get it right, the factory could help Tesla

:03:14.:03:17.

transform battery technology, which has consistently lagged behind

:03:18.:03:19.

Our North America Technology reporter Dave Lee has been

:03:20.:03:24.

taking a look around the brand new Giga factory.

:03:25.:03:26.

They call Reno the biggest little city in the world. But there is

:03:27.:03:40.

nothing little about this. The Giga factory spans 3,000 acres and around

:03:41.:03:45.

a thousand construction workers are working seven days a week to finish

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it. When Elon Musk set out his new plans, he said he needs more

:04:02.:04:07.

batteries. Much of the factory is still secret. But they wanted to

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show the world that they're raring to go and bosses say the factory is

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around two years ahead of schedule. Welcome to the factory. I believe we

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are on track to meet the half million in 2018. Long-term it will

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make sense to have a Giga factory in Europe and one in China. Proeblt one

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in India. -- probably one in India. Mr Musk has to answer safety

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concerns about the cars. Last month it was revealed the auto function

:04:44.:04:47.

was being investigated to see if it was responsible for the death of a

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driver. Do you have any regrets about rolling out autopilot? No, I

:04:57.:05:00.

think we did the right thing. We have the internal data to know that

:05:01.:05:08.

we improved the people's safety. Not just in fatalities, but in injuries.

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It is partly the enthusiasm of Elon Musk that keeps investors

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interested. The success of this will make or break him. 3,000 acres.

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Dr Peter Harrop, a leading expert on electric vehicles

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Great to have you with us in the studio. Let's start with this. When

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it is up and running and completed, it will be a big space, a lot of

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batty, it is Gos to make the half a -- it is good to make the batteries

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or the cars, the cars are whizz bang, but the batteries let it down.

:05:57.:05:59.

Are they improving the batteries? Yes, absolutely. But they have to

:06:00.:06:04.

take a risk on a risk. All the battery companies and there are ones

:06:05.:06:09.

putting in more capacity than Tesla and they have to take a lis bg to

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get your -- risk to get your car to have a battery and be affordable and

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run for many hundreds of miles, not one hundred miles, that is what we

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want, they have to change the chemistry of the battery and they

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have to change what they're doing while their running to produce more

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and they have to produce more, but they have to change the nature of

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the battery. Do you mean different chemicals? Yes, it is like making a

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different battery. On the run they're changing what they're

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making, Tesla is among others doing that. It has the backing of a

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gorilla called pan sonic. So there is a massive battle between the east

:06:57.:07:02.

Asians to become the biggest in batteries. This is just part of a

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bigger picture around the world, the actual battery industry is growing

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very fast. It is huge. In China, which is largely protected, the

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market, BYD is huge and is in a sense copying BYD in making

:07:27.:07:30.

excellent vehicles and battery, but it will do it better and we have LG

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in Korea putting in capacity all over the world, not just America.

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And so on. So there is a battle of giants. We called it the potential

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start of electrical revolution and changing the way we consume all of

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the things we do. Everything is batteries and freeing us from power

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points. That is a substantial change that could change how we do things?

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It is true and it is happening all at once. You have getting big

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batteries in ships and boats. They're in the bus passing you. That

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BYD I mentioned is one of the biggest in electric buses and they

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use more batteries in car in value. So they're coming in so fast that we

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are as analysts have quite a challenge in predicting whether

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there will be a famine or a feast. There could be a shortage, despite

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this, it is an amazing thing to say, there could be a shortage and other

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people are putting in Giga factories. Thank you. Some other

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stories for you today. Deutsche Bank posted a net

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profit of $22 million for the second quarter -

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substantially lower than the $875m for the same period last year,

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as low interest rates and volatile The bank has lost around 40%

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of its market value this year as concerns mount about its capital

:08:57.:09:01.

position and $14 billion in fines But the 15% fall in

:09:02.:09:04.

sales wasn't as bad as Apple sold 40.4 million iPhones

:09:05.:09:20.

in its third quarter, Demand for the tech giant's flagship

:09:21.:09:23.

product has been slowing faced with increased

:09:24.:09:31.

competition from rivals, slowing economic growth and users

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hanging onto existing Twitter has reported its slowest

:09:33.:09:34.

growth in quarterly revenues since floating on the stock

:09:35.:09:44.

market in 2013. The company is facing tough

:09:45.:09:48.

competition from other social media platforms,

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including Instagram and Snapchat. But it wasn't all bad

:09:53.:09:59.

news, the number of and that's an important

:10:00.:10:01.

gauge for advertisers. Twitter attracted 313 million

:10:02.:10:04.

users over the month, Asian markets got another

:10:05.:10:06.

boost on reports that Japanese Prime Minister Shinzo Abe

:10:07.:10:16.

is to announce a new stimulus Measures are likely to include

:10:17.:10:19.

spending by national and local governments,

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as well as loan programmes Mariko Oi is in Singapore and has

:10:33.:10:34.

the rest of the details. We would need. Let me ask you this,

:10:35.:10:44.

here they are, throwing the kitchen sink at this economy, more money

:10:45.:10:49.

going down the gurgleer and many will say what Japan needs is

:10:50.:10:58.

structural reforms. Indeed. As you say, some critics would argue extra

:10:59.:11:02.

money being printed is not going to directly help people to spend money,

:11:03.:11:09.

which what is Japan's economy needs and the local and national

:11:10.:11:13.

government spending money would help big businesses, but not ordinary

:11:14.:11:18.

consumers. But even though we have been anticipating a stimulus measure

:11:19.:11:24.

to be announced, the size of it is so huge that Japanese markets

:11:25.:11:34.

reacted positively, ending the day hay -- higher and people expect the

:11:35.:11:39.

central bank to be under more pressure to announce further

:11:40.:11:47.

stimulus tomorrow. While we have got you, let's talk about Nintendo, it

:11:48.:11:54.

has been in the news with Pokemon, but it has come out with not great

:11:55.:12:00.

numbers, but the numbers are backward looking. Pock Monday will

:12:01.:12:07.

have the -- Pokemon will have the influence going forward. Yes the

:12:08.:12:12.

figures are for between April and June. But the company had worned

:12:13.:12:22.

investors that the huge success of Pokemon would not impact this

:12:23.:12:27.

result. So investors expected that. They hope the Pokemon will be able

:12:28.:12:32.

to bring in more money and the company still expects to make money

:12:33.:12:35.

for the full year. Good stuff. Thank you. Here are the numbers.

:12:36.:12:47.

The Nikkei in Tokyo ending higher, boosted by reports of that

:12:48.:12:50.

28 trillion yen economic stimulus package to reflate

:12:51.:12:51.

At this stage, it's just speculation, and it's unclear how

:12:52.:12:55.

much will be actually be spent to directly boost growth.

:12:56.:12:57.

In the UK, we get the first look at UK GDP

:12:58.:13:00.

That mainly covers the period running up to the EU referendum -

:13:01.:13:04.

the three months to the end of June - but it could crucially give us

:13:05.:13:07.

a sense of whether the UK economy is entering Brexit negotiations

:13:08.:13:10.

and the upheaval of its departure from a position of economic strength

:13:11.:13:13.

We're expecting a figure between 0.3% and 0.5%.

:13:14.:13:16.

More on that in a moment, first Samira has the details about

:13:17.:13:19.

The Fed is likely to keep interest rates unchanged and policy makers

:13:20.:13:30.

want to reconcile positive data with a slow down in global growth.

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Several companies will report earnings, including Facebook and

:13:37.:13:41.

coca cola. Facebook is the world's largest social media service and it

:13:42.:13:51.

has been on a great run. Now Facebook is developing and investing

:13:52.:13:57.

in solutions for photo sharing and virtual reality. Coca cola, sales in

:13:58.:14:06.

America and Europe are expected to have remained strong and what

:14:07.:14:11.

investors will be keen to hear about is any impact from Britain's vote to

:14:12.:14:22.

leave the EU. Thank you. We are joined by a guest. Tom, the let's

:14:23.:14:32.

start with Arm, the chip-maker, the UK chip-maker, it has been in the

:14:33.:14:38.

news, a Japanese bank buying them for billions. But they're doing

:14:39.:14:42.

well. They have announced second quarter profits. Two things jump

:14:43.:14:48.

out, one is how profitable the business is, 270 million pounds of

:14:49.:14:53.

seams resulting in 130 million of profits. That is a fantastic margin

:14:54.:15:00.

and the second thing is if you add up the profits, soft bank is paying

:15:01.:15:06.

40 times the annual profits. But the pound has fallen, to soft bank it is

:15:07.:15:18.

cheap. It is a fascinating story to create these businesses, no we know

:15:19.:15:23.

that we are selling them off. Let's talk about GDP figures. We are

:15:24.:15:30.

expecting a snapshot but not the whole story for Brexit. These are

:15:31.:15:37.

until the end of June so we have a little bit but actually be is

:15:38.:15:40.

referred to a world that no longer exists. We expect around 0.5%

:15:41.:15:45.

growth, a fraction better than it was in the first quarter. But what

:15:46.:15:55.

matters is what happens after. Something we will talk about, I'm

:15:56.:15:57.

sure. From "communication"

:15:58.:15:57.

to "congregation". Later in the programme we speak

:15:58.:15:58.

to a man who left his job with the telecoms giant Ericsson

:15:59.:16:02.

to pursue a very different You're watching business live from

:16:03.:16:04.

BBC News. Britain's third-largest

:16:05.:16:11.

housebuilder, Taylor Wimpey, has published posted a 12 percent

:16:12.:16:12.

rise in first-half pre-tax profits The company said it was too

:16:13.:16:16.

soon to see how the June 23 Brexit vote would affect

:16:17.:16:25.

the housing market in the months ahead, but so far there had been no

:16:26.:16:28.

noticeable change in demand. Andrew Walker is in our business

:16:29.:16:43.

newsroom. No noticeable change yet but the yet is the crucial thing. It

:16:44.:16:49.

was quite a robust performance. About a quarter of ?1 billion worth

:16:50.:16:54.

of profit. But look what happened to the share price. We've got this

:16:55.:17:02.

decline. It has bounced back significantly but we're still

:17:03.:17:04.

looking at a share price that is 25% below where it was in the

:17:05.:17:11.

referendum. Investors are concerned this would be exposed if there were

:17:12.:17:19.

any wider fallout. But as you mentioned the chief executive says

:17:20.:17:21.

so far there has been no discernible impact. There is a period further

:17:22.:17:28.

into the future where it will come through. I want to speak about one

:17:29.:17:43.

of the biggest pharmaceutical companies, GlaxoSmithKline. The CEO

:17:44.:17:50.

was warning about Brexit and earlier they said, guess what, Brexit was

:17:51.:17:57.

not that bad, we will invest ?270 million in UK sites. Indeed. Three

:17:58.:18:05.

sites in the UK. This company tells you a very different story about the

:18:06.:18:08.

aftermath of the vote. Here we have the price going up. That partly

:18:09.:18:16.

reflects the fact that pharmaceutical companies are seen as

:18:17.:18:22.

defensive investment. People would still get sick, they would still

:18:23.:18:27.

need their products. A lot of their earnings are in foreign currencies

:18:28.:18:31.

when you factor in the fall in sterling that makes the profit worth

:18:32.:18:39.

more. Good stuff as always. Thank you very much. Here are the details

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on this story. You are watching business live and news of the

:18:52.:19:00.

GigaFactory. It's the home of electric vehicle

:19:01.:19:06.

giant Tesla as the firm promises to transform how we power our cars,

:19:07.:19:08.

our cities and our lives. And the new $5 billion giga-factory

:19:09.:19:11.

will be at the heart of it. We've been for a sneak peak -

:19:12.:19:14.

you can watch that again, 3000 acres, that is what it will

:19:15.:19:22.

cover. A quick look at the numbers for you. Looking pretty optimistic.

:19:23.:19:28.

Stimulus rumours helping boost the numbers from Japan. We will get the

:19:29.:19:33.

GDP figure and we will watch it closely.

:19:34.:19:38.

American central bank is meeting today. It is a big week.

:19:39.:19:44.

Have you ever spared a thought for the men and women who keep

:19:45.:19:47.

The men and women who work on cargo ships and vessels

:19:48.:19:51.

They spend weeks at sea, away from home, in strange

:19:52.:19:54.

and unfamiliar places and increasingly face threats

:19:55.:19:57.

Shipping is by far the most common method of moving

:19:58.:20:02.

90 per cent of all of the products used worldwide are

:20:03.:20:07.

The Sailors Society is a charity which provides

:20:08.:20:11.

the world's 1.5 million seafarers with services

:20:12.:20:14.

Many of those stationed at sea will find themselves away from home

:20:15.:20:18.

for between 9 to 12 months at a time.

:20:19.:20:23.

The organisation's chief executive is Stuart Rivers.

:20:24.:20:38.

Paint a picture of what it's like at sea for some of these sailors you

:20:39.:20:45.

help out. The dependency we have on the sea, we are supporting a

:20:46.:20:53.

merchant fleet of 70,000 ships, if you imagine the people on those

:20:54.:21:03.

ships are away from home for 9-12 months, facing bad weather, piracy,

:21:04.:21:09.

terrorism, when they come into port, quite often they just want a

:21:10.:21:12.

friendly face and someone to talk to who is going to understand the

:21:13.:21:15.

problems they face on a day-to-day basis. They cannot always come into

:21:16.:21:22.

port. I've spent a lot of time in the Middle East and it is easy to

:21:23.:21:26.

see ships anchored outside of port because they have no cargo. The

:21:27.:21:30.

people shipping that don't necessarily know who is on their

:21:31.:21:36.

ship. You end up with sailors on ships that are empty, without food

:21:37.:21:45.

or water or communication. Absolutely. The society are involved

:21:46.:21:50.

in situations where ships have been abandoned, perhaps the owner has

:21:51.:21:54.

filed for bankruptcy and the crew have been left to drift without the

:21:55.:21:58.

essentials like food and water to keep them going. You are a charity

:21:59.:22:08.

that supports the business that greases the wheels of the global

:22:09.:22:11.

economy but you still need to be funded. What is this about? Coming

:22:12.:22:21.

to that in a moment? We are very well supported by the industry

:22:22.:22:25.

itself and we work closely with shipping companies. When we hit

:22:26.:22:30.

points of recession and there are points on the shipping industry,

:22:31.:22:36.

that has an effect on our income. We are in the process of diversifying

:22:37.:22:40.

that income and we are launching our own brand of coffee, sourced from

:22:41.:22:44.

countries where we are working to support seafarers. This gives us the

:22:45.:22:49.

opportunity to say, you might not be able to afford to donate to us but

:22:50.:22:55.

by coffee. Thank you so much for coming in and best of luck. Really

:22:56.:23:04.

great charity. In a moment we will look through the business pages but

:23:05.:23:09.

first, here is a reminder of how you can get in touch with us.

:23:10.:23:16.

We will keep you up-to-date with all the latest details with insight and

:23:17.:23:22.

analysis from the BBC's team around the world. We want to hear from you

:23:23.:23:27.

as well. Get involved on the web page. You can find us on Facebook,

:23:28.:23:39.

BBC business news. We are there were you need to know. Tom is back. I am

:23:40.:23:51.

going to bleed that drive. This paper, the 19 most productive

:23:52.:23:58.

countries in the world. A new study? This looks at GDP per capita and

:23:59.:24:01.

compares it with how many hours on average people work in those

:24:02.:24:06.

countries. They pitted together and you end up with a positivity index.

:24:07.:24:12.

-- productivity. Some of the countries we don't think that

:24:13.:24:15.

productive like Italy and Spain are in the top 16 in the world. By

:24:16.:24:19.

global standards they are pretty productive. The other end of the

:24:20.:24:25.

table, we have Luxembourg at the top of the table, that tells us more

:24:26.:24:37.

about the type of industry in that country, financial services are

:24:38.:24:40.

relatively small in numbers, but they add huge value. Between number

:24:41.:24:48.

one and number two, 45 points in Luxembourg. It is a crazy

:24:49.:24:56.

difference. It is a reflection of the industry, which Luxembourg

:24:57.:25:04.

obviously focuses on. UK comes one place behind Iceland. Bit of a fever

:25:05.:25:11.

there. We will not delve weakly into that. And Australia is number three

:25:12.:25:17.

on the list! The most productive English-speaking nation in the

:25:18.:25:23.

world. If it is so productive, go back there... I wish! I want to talk

:25:24.:25:31.

about this one. If you commute to work on a bike, how about this? You

:25:32.:25:37.

cycle within the bass and pave the privilege. This seems like one of

:25:38.:25:43.

more ludicrous idea. You pay $30 for the privilege of getting tired on

:25:44.:25:49.

the bus. It keeps you away from the weather but you still get your keep

:25:50.:25:55.

fit regime. Thank you very much. One of the producers said he would do

:25:56.:26:01.

that. It says a lot about him! Thank you for your company today. We will

:26:02.:26:04.

do it all again tomorrow. Goodbye.

:26:05.:26:08.

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