Viewing Month: April 1956

Tabell’s Market Letter – April 06, 1956

Tabell’s Market Letter – April 06, 1956

Tabell's Market Letter - April 06, 1956
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r Wals &-tonnc Co. – – I MEMBERS NEw fORk STOCK EXCHANGE AND OTHER LEADING STOCK AND' COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Swit,ld) OFFICES COAST TO COAST CONNECTEr; BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER April 6, 1956 The market rise lost seme of its momentum last week although the Dow-Jones Industrials reached a new high at 522 .86. At this level the average was approaching our 525-535 objective for the Dow-Jones Indus- trials, indicating the advisability of profit taking on strength in trading accounts. As this letter has repeatedly emphasized, however, concentration on individual stocks 1\111 be far more fruitful than trying to guess the trend of the general market. The secret of success may well lie in picking the stocks which will outperform the general market regard- less of what it does, rather than in forecasting the moves of the average. BARBER OIL (66) has recently-concluded 'negotia-tJons will conduct exploration and development on 290,000 acres controlled by Kirby Lumber Company. The acreage is located in the gulf coast area of Texas and Louisiana. Barber will carryon the search for mineral de- posits through a wholly-owned subsidiary, Oil Reserves Corp. of Houston, Texas. CORNELL-DUBILIER (36) recently reported December quarter earnings of 71 cents per common share versus 1.01 in the corresponding 1954 period. Reason for the decline was temporary heavy competition within the industry. Management expects this factor to become less important as color TV production rises in the fall. This letter continues to regard the stock as an excellent long term capital appreCiation vehicle. EAGLE PICHER (43) which first entered our recommended list at 22 has recently reported very favorable results for its fiscal quar- ter ended last February. Sales increased 13.8 to almost 30 million dollars and income was up to 1.04–per share versus 71 cents last year. These figures do not include a non-recurring profit of 1.41 from sale of Mexican The first quarter is seasonally a poor and, if business continues at the current rate, it would appear legitimate to expect earnings to approach 6 for 1956. – The recent annual report of (42) made an excellent comparison with that -Earning-sw.er.e at …lt.21 versl,lS 2.82 in ,- the prior year with sales posting a 32 increase to 47 million. Since operations at the! Fremont plant began to show substantial improvement only in the latter part of 1955 and the JonesFoundry and Machine was not acquired until August 1956 results should continue to show im- provement. Some of the pressure on profit margins may also be removed this year by increased latex production and lower natural rubber prices. Work at the San Manuel Mine of MAGMA COPPER (25) is progressing on schedule and the mine is expected to reach a full prcduction basis by the middle of this year. Full operation of the San Manuel Mine will have a noticable effect on wor1d copper supply and will make Magma the third largest U.S. copper producer. According to a recent release by the company, surface construction is almost complete and underground development is proceeding on schedule, with a third shaft to be equipped this month. Various estimates have been made as to Magma's earnings ability once the San Manuel operation is in ,illl swing but with copper at present prices, Magma could well earn at a r4te of 30 per share, with cash flow much higher. PAN AMERICAN WORLD AIRWAYS (20) recently received a rebate of subsidy from the government, arising mostly from overpayment by American Overseas Airlines, which Pan American-absorbed in 1950. This figure was reduced by a-subsidy 2eceived. The . justment reflected the htlantic division only, and the Pacific and Latin hmerican divisions are-still subject to subsidy readjustment. It should be remembered that Pan-American recently received a permanent subsidy- rate from the CAB and in the future will no longer be subjected to adjustments of back subsidy. AvlT/dm En—TD vi. THELL vlALSTON & CO., INC. '- Thll letter ur. not. and lI.ndoH' noelreumltaned IS to be eonatrued …. aD. offe'l' to HI( or a .aliertatlCIn to buy any nferred to herein The mf()rmatlon \.t not ,;…..rantftd as to aecuracy or eoaJ.pWtenesa tM t'tIrnfiltung ' not, and under no oI!'ircum.,t.noes IS t.n beeon3trued U, a reprf!'l3entatlOl'l by 6 Co, All elllrltlllllOM of osunlOn are aub,.,ct to 1n1.hout Walaton. Co.. Inc, or any Director or St.Qekh()lder t.hereof, mlY have In Inttore'Ot In 5Untae mentlonei he'reln Thb markltt Letter is intended and Ilre5ft).ted meTel,. A.I II genet'a!, Informal commentary on oay to day market ne….s and nt a., a eompJeu. analJ'lfil to an,. Iunbe. referred to be urntllhed upon requll'!St.. WN 3I)l – — …… III

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Tabell’s Market Letter – April 13, 1956

Tabell’s Market Letter – April 13, 1956

Tabell's Market Letter - April 13, 1956
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— &- Co.Walston—-Inc. Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Sw;t,.,Idl OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lEnER April 13, 1956 The Dow-Jones industrials reached a new high of 524.37 on Monday be- fore reaction to a low of 506.73 on Friday. The rail average, which seems tc be meeting some supply around the 173 level, failed to reach new high territory during the week but reacted only moderately on Tuesday's weak- ness. There is no change in my market opinion. I expect the various averagee to do little marketwise for the next six months or more. On the upside, I find it difficult, at the moment, to envision a much higher level than rougr ly the 525-535 area. On the downside, there is strong support at the 490-48c -and. 1l.gain a,t, ,same situation prevails in the rails o with 180-182 as a possible upside pr-ojection and at'r6'4-162-ana- again at 155-150. As I outlined in my year-end forecast, I anticipate a broa 10 to 15 consolidating area similar to 1951-1953 for at least the next fri) months. hll of this will be in preparation for an eventual upside penetra- tion at a later date to 750 or higher for the industrial average during the 1958-1960 period. While the stock market as measured by the averages may move in a nar- row trading area for the 'foreseeable future, individual issues will have worthwhile moves. The technical patterns of quite a few individual issues indicate the possibility of upside moves of 50 or more during a period in which the averages may' hold in a lC or 15 trading range. Conversely, qUitE a few patterns suggest greater percentage declines than envisioned by the averages and, of course, a much larger number indicate no movement of great importance in either direction. Perhaps a brief recapitulation of the tech- nical indications of some of the groups might be of interest. AIR-CONDITIONING. This group has done little marketwise for almost twc years. Relative strength has been showing improving action recently and there appears to be little downside risk. Carrier Corp. and Trane Company appear to have the most interesting patterns. AIRLINES F T-Q.is is -ano.ther group. that has ha.s done nothing of importance marketw\;se for a year. Still believe theionger ferm potentials are most interesting and with higher earnings indicated for 1956, there appears to be a minimum of downSide risk in holding these issues. -Al- most all the issues in the group appear attractive technically, but Pan- American World Airways is my favorite. Also believe United Airlines offers above average possibilities. hUTOMOBILES. It would appear that this group needs a bit more time to build up a favorable technical pattern and it may work a bit lower in the process. Later in the year, this group should offer some interesting profitE possibilities. BUILDING SUPPLIES. Very long term patterns and recent actior has been improving. CEMENT. h further consolidating period needed. CHEMICAL. Individual issues have diverse patterns, but the majority are on the favorable side. DRUGS. 30me very interesting profit potentials in this group. MINING & SMELTING. Long term indications still remain favorable and should b.e bo- ught on mi n-or p – r i c e – declines. MOVIES. Unfavorable. GIL. Individual issues still look attractive. See March 29th letter. STEEL. Has held in trading range ror six months or longer. U. S. Steel pattern is typical.-Has held in 51-62 area since July. An upside penetration would indicate 74-77. So far, relative strength has been below average but this may change. Group should be watched closely for an indication of the direction of the next move. EDMUND W. TABELL vU,LSTON & CO. INC. This mllrh(!t letter not. and under no Clrcum131ances IS to he construed as, an offer to 'lell or n qOhcltntlOn to buy any secufltics referred to herem The mformatlon contained herein IS not gUII.rnnteed ns to accurncy or completeness and the furmshmK thereof IS lIot, anil under no clrcum;tanceb Ib to be construed as, II. re)Jresentntion by \Valston & Co, Inc All expressions of OPinIOn are subJect tG change Without notIce & Co, Inc, or I\ny Officer, Director or Stockholder thereof, may hale an llItcrest III the SccufltlCS mentIoned herem ThiS market letter IS mtendC(! and presented merely us a mformlll commentary on day to day market news and not as a complete anai'SIB AdditIOnal mformatlon WIth respect to any SecUrItlCS referred to herem \\111 be furm.,hcu upon request '\\'N 301

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Tabell’s Market Letter – April 18, 1956

Tabell’s Market Letter – April 18, 1956

Tabell's Market Letter - April 18, 1956
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Walston 5- Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Swoheda.d) OFFICES COAST TO COAST CONNKTEC BY DIRECT PRIVATE WIRE SYSTEM EDMUND W. TABELL INSTITUTIONAL LETTER April 18, 1956 Back on the job after an extended business trip and a vacation in I find that there is little change in the technical pattern outlined in my let ter df March 5th. The Dow-Jones industrial average reached a high of 524.37 early in April and subsequently reacted to 506.73. As outlined in my 1956 fore cast, it is probable that the industrials will again contact the uptrend line connecting the July high of 471.73 and the September high of 489.94. This up- trend line was around the 525-535 level in March. It has now moved forward to the 530-540 level for April. When this level is reached it is possible th,t the market will have reached its high for quite some time. On the downSide, there is very strong support at the 490-480 level. At the present price level of 506 .55 the industrial average is about midway between the two projections. It is possible that the 540-480 level will contain the averages for the next six months unless news events more dramatic than now envisioned occur. vlhile this does not appear to be a very vulnerable pattern, it must be realized that the market is in high territory and, particularly in the blue- chip section, is discounting increaSing future earnings and dividends rather than immediate prospects. At a price-earnings ratio of 14.1 and a yield of 4 the industrial average is not selling at levels as high as those reached at previous market peaks, but it is still at a relatively high level. The weak- ness in the bond market has also brought the spread between high grade bonds and stocks below 1. This is a level from which it is difficult to project a dynamic upside move in stock prices. From a technical point of view, both the averages and individual stockE have not as yet formed distributional top patterns of any great importance and it would appear that more time will be needed if such patterns are to be However, the market at this level must be watched closely for signs of deterioration not yet evident. One potentially disturbing factor is that the twenty-five week total of downside volume has been slowly increasing despite the rise in the averages and also upside volume has not materially increased. If the moving total of downside volume should expand to new high territory for the past twelve months accompanied by a downside penetration the 200-day moving average (which now stands at around 475),the technical picture would be quite disturbing. Until some of these potentially unfavorable factors actually take place,however, an attitude of cautious op- timism is warranted with emphasis on special situations and a willingness to buy selected issues on moderate weakness. It is in the technical action of individual issues and groups that the real clue to market movement will be found. The indications are quite diverse. In a broad sense, groups fall roughly into the following categories,but the situation is further complicated by the fact that even within a group indi- vidual issues are both favorable and unfavorable. As an example, National Distillers has a favorable pattern while other issues in the group show me- diocre relative strength action. FAVORABLE Air-conditioning, Building Supplies, Drug, Electrical EqUipment, Machinery, Oils, Paper. – GOOD ACTION BUT iUGH Aluminum, Business Machines, Coal, Glass Con- tainers, Railroad Equipment. NEUTRAL Aircraft Mfg., Auto Equipment, Brass, Cement, Chemicals, Communications, Finance, Food Chains, Mining & Smelting, Rails, Rubber, Steel, Sugar, Tin Cans, Tobacco, Utilities. FOOR ACTION BUT IMFROVING Airlines, ElectroniCS, Fertilizer, Gold, Meat Packing. UNFAVORABLE Automobiles, Farm Machinery, Food roducts, Gas,Liquors, Movies, Retail Chains, Soft Drink, Textile. The above compilation does not show the entire picture. For example, the steels are close to an upside breakout and could reverse their hitherto inability to reach new highs since September. The airlines and electronics are forming strong patterns but the timing of the potential rise is diffi- cult and patience may be required. Automobile issues are acting poorly and may work lower over the near term, but should be watched on weakness for a buying spot and a possible rise later in the year. BImmm ' .'l'ABELL Th,s memorandum is nol to be construed 051 an offer. or !.OIIC!tllllon 0f ff t'S to b uy or II any may hIt,,!! an Interest In some Of all of Ille secuntlu mentioned herein Tl)e foregOlnQ materia b.ued upon .nformaflon believed reliable but not neoeuatoly oomplete, not gual/lnteed /IS p.f!J!,,,,rHt' blr' bi WJ1II9'n & Cooi o.nrformatptaerntneornlythe'IeIof1,5 t f I d' t ' lended to foredose Independent InquHy II or Ina, /In no In

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Tabell’s Market Letter – April 20, 1956

Tabell’s Market Letter – April 20, 1956

Tabell's Market Letter - April 20, 1956
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Walston &- Co.—-Inc, Members New York Stock Exchange NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (SwH,Id) OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER f..pril 20, 1956 1IESTERN PAC IFIC RAIIROAD CO. Current Price 72 /4 vies-tern Pacific, which has held in the Current Dividend 3.00 73-57 trading area for over fifteen Current Yield 4.1 months, is now shO'wing signs O'f a Funded Debt 42,859,000 Equipment Oblig. 15,099,933 CommO'n StO'ck 566,367 shs. PO'ssible nearby upside breakO'ut. This WO'uld be a very encO'uraging technical development and indicate an advance t a higher price plateau. Net per share, 1955 Net The long term grO'wth prO'spects O'f Wes ern -Pacific are-very impressive., Refl ing rapid develO'pment O'f PO'Pulation a Mkt.Range 1956-55 73 7/8-56 3/4 industry in the territO'ry served,reve e BefO're Sinking Funds. Earnings after S.F. were 6.86 in 1955 and 5.62 in 1954. grO'wth is well above that of Class I railrO'ads in the aggregate. Traffic vO'lume be subs tantial in the cO'm mO'nths, with the 40 million FO'rd ass bly plant at Milpitas, CalifO'rnia,(ne San Jose) and O'ther new industrial shippers affO'rding considerable business This grO'wth is expected to' continue and eventually tO'P the 59.2 millions 0' tO'tal revenue in 1953 generated by the ttnusual revenue bulge during the KO'r n hO'stilities because O'f movement of high-rated Government traffic. Total rev nues were 53.7 in 1955 and are expected-tO' be higher in 1956. I Largely serving as a bridgeline carrier to the Pacific Coast, the company O'perates 1200 miles of first-line track. The main line of 927 miles extends frO'm San FranciscO'-Oakland to a cO'nnectiO'n with the Denver & RiO' Grande I'lestern at Salt Lake City. vlhile this rO'ute is longer than the cO'mpeting 785 miles of Southern Pacific to' Ogden, 11estern Pacific's rO'ute thrO'ugh the Feather River CanyO'n crosses the Sierra Nevada at a lower eleva tiO'n and with less grades and. curvature. Western Pacific also has its Insi Gateway rO'ute with 107 miles 'O'f main line frO'm Keddie, California, to' Bieb , California, which cO'nnects the 'Santa at Stockton, O'ne of the Pacific CO'ast NO'rth-South systems. The traffic is almost entirely freight. Western Pacific O'peratE O'nly twO' passenger trains. One is the famous California Zephyr which operatE at a profit. The O'ther is a small RDC Budd Car which is run primarily for — railrO'ad personnel and operates at a loss. The freight traffic has been en- larged by an aggressive industrial department supplemented by acquiring lanc fO'r industrial purpO'ses to' attract custO'mers. This PO'licy has paid and is evidenced by the large number of plants lO'cating in San JO'se, StO'cktO'n, Sacramento, Pittsburgh, MO'destO' and O'ther lO'calities. Since cO'ming out of reO'rganizatiO'n in 194, the company has plO'ughed back intO' prO'perty O'ver 50 a share in excess O'f dividend payO'ut. This mO'dernizatiO'n prO'gram,which was stepped up when Mr. Fred Ihitman was installed as President in 1949, is expected to cO'ntinue. Just when it wilr be completed is difficult to' ascertain, but it should result in a sharp in- crease in earning PO'wer with 15 O'r 20 a share as a possible projectiO'n. PrO'gress has been substantial already. FO'r example, the signal prO'gram has been practically cO'mpleted. At a CO'st O'f O'ver 7 million, Centralized Traffi CO'ntrO'l has been installed frO'm Salt Lake City to' Oakland and a mO'dified C.T.C. has been installed on the San Jose branch to the FO'rd plant at Milpit s. Western Pacific will receive a tax benefit O'f apprO'ximately 5 – —. –millioIT' from the'reorganrzati-O'n'-ofcthe !5acramentO'-PO'rthern-Rwy -under- wh-ich Western Pacific will receive 75,000 shares of the subsidiary's stO'ck, its sO'le capitalizatiO'n in return for over 25 milliO'n securities in the O'ld cO'mpany.Just tc what years this tax credit will be allO'cated is nO't The stock, in my O'piniO'n,PO'ssesses considerable merit for inter- mediate and lO'ng term appreciation. \'lith the eliminatiO'n O'f the preferred stO'ck in 1954,further anticipated gains in earnings shO'uld result in a highe dividend payout.There is alsO' the lO'ng term speculative possibility that Western Pacific can sO'me time becO'me part of transcO'ntinental railrO'ad sys– – i tem.The technical pattern is very impressive.The upside PO'tential O'f the 73- 7 area is 105-115 fO'r the intermediate term.However,the brO'ad range in which stO'ck has held since 1951 suggests a much higher PO'tential over longer term. ThIS mnrket letter 'I not, and under no CirCumstances IS to he construed as, an offer to sell or 11 contmne-I! herem 15 not as to accuracy or completeness and the furmshlng thereof IS n01, 0 C ce. hy Wnl!.ton & Co Inc All e,,presslOns of opInion are subJect to change without notIce Walston & r;j;, IJ'IIQ/litt'Im1\' hll\e an mterest the SecUrltlC!! mentIOned herem. Thls market letter IS mtended and presented fo Sto kh c fiory on Id 0dayert t 0 hde re of may kt news and not a!! a complete analYSIS AddltlonlliwlormatlOn 1,I,1th respect to any seCUTltIes referred to herem Will be furnished upon request – w ,

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Tabell’s Market Letter – April 27, 1956

Tabell’s Market Letter – April 27, 1956

Tabell's Market Letter - April 27, 1956
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NEW YORK -W–a-lIsntocn,-&– C-o. Members New Y01'k Stock Exchange PHILADELPHIA LOS ANGELES SAN FRANCISCO BASLE (Sw,h.,I.nd) OFFICES COAST TO COAST CONNECTED 8Y DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lEnER April 27 J 1956 Perhaps the outstanding feature of the market is its extreme diyersity Despite the fact that the industrial average, at the week's low, was more than twenty pOints below its recent high, there were many individual issues that reached new high territory and the rail average is selling at new highs despite the decline in the industrials. This diverse action should continue and my market opinion remains the same. I expect the averages to move in a relatively narrow trading area with worthwhile moves in both directions in individual issues. In my recommended list for capital appreciation for six months or long er, ,a S.\llJn background of fundamentals. Some patience is often required, but the upside potentials offset this The list is reviewed periodically and a summary of the outlook for each issue starts below ALLEGHANY CORP. ( 10) This highly leveraged investment company, with major nD1dings in Missouri Pacific, New York Central and Investors Diversified Services, is an interesting long term speculation. Originally recommended at 3 3/4 in late 1954, moved up to a high of 11 in June 1955 and has been consolidating in the 11 – 7 5/8 range since. \llould continue holding and IUY on motterate weakness. The intermediate term on my technical work is 13-15 and the longer term potential is 17-18. ALLEGHENY LUDLUM STEEL (41) – This stock has me-ved-up sharply since its original recommendation at 1-15 (adjusted for 2-for-l sp lit in 1955), but higher levels are still indicated. The bulk of Allegheny's output is in specialty steels and it also has a promising position in for the first quarter were 1.23 and a 5.00 potential for 1956 is conser- vative, it would appear, The dividend of 401 quarterly to yield only 3.9 is a conservative payout and an extra or stock dividend is a possibility. A high of 43 1/8 was reached in March and the stock has since held in the 4340 area. The long term potential is 75 and there is downside support at o 38-35..-.T.hf-Lstock- ..-..s-.-.hQuldbe — hS))Q. and – a.d.-de-d to on moderate — price d ec —. l i-n-e s . .oO'';)'SH & CHEMICAL (115) This stock has been in my list Since 195 when it was recommended at 40. Despite its rise to a recent high of 120, retention is still advised. Earnings for the first quarter were 1.74 as compared with 1.33 in the same quarter of 1955. Earnings for 1956 could reach the 7.00-8.00 level. On 8.00 earnings, the price to earnings ratio would be 14.4, a modest ratio for a growth chemical company. T'he stock split of 2 1/2 shares for 1 was recently approved and when issued trading in the new stock has started. The technical upside potential-is 120-150 but the pattern may broaden. There is downside support at 110-105. The stock should be held and added to on moderate price weakness. BARBER OIL (65) originally recommended at 59 last year, remains a long range speculation on development of special situations on the part of a management whose record in the oil industry speaks for itself. According – to the latest lalance sheet there is about 27 per share of cash and govern- bonds behind each share of Barber, plus some 6.00 per share of market value of TXL eil and Texas Pacific Land Trust stock. Considerable cash flow is – provided by a fleet of tankers which are said to be operating at a profit– able'rate so far this year. Since Barber is currently believed to be sezl- ing well below true liquidating worth, the investor would seem to be get- ting good value, plus the speculative potential inherentin new ventures- on which the company may embark. Barber has for some -time' ownea a 50- in- terest in American Gilsonite, which last year announced a commercially – feasible process for obtaining gasoline from this mineral. The company re- cently concluded a contract with Kirby Lumber to explore 290,000 acres owned-by that company and Louisiana. Intermediate-term objective is 75-80,followed hy 105-115. Support is at 65-60. & DECKER (38 ) recommended at 19, has been in the 40-43 area Since the 2-for-l split in September, 1955. This do-it-yourself stock is broadening operations in foreign countries. Its products are used mainly for maintenance purposes. Earnings for first 6 months of 1956 fiscal year (ending Sept.30th) were 2.44. Dividend payout of 1.OO,plus stock divi dends modest and could be increased. Jpside penetration of the 8-month old 33-40 range wQJ1Jd h-rm potAntradjpg indicate followed by a 0letieQs IftJ'ir.llnd under n.) clrcumstllncec 1'1 to he construed as, lin offer tl) Ol II bohCltatlOn to buy my seeuntIc'l referred herem The mformabon t -bMlttn ne'rl'lterelw' t.e n.)U l,).rla9'nnteed as to nccurncy rrr completeness nnd the (II rnishm;- thereof IS n,ot…..AIV.j.l.ll,d,e lo be construeri n;, n reprcsentatlOn by Wnlston & en Inc All cpreSSJQll'l of OPlnlon Ilre …ubJcct to Chll.ll1;e v.lthuut ntlfC Wal'ltoU.4JiVvUNU ur Stockholder thcrer, mny hnvc .In mtcrest secuntlCS mentlOncd herein Thl'l market letter IS Intended and news lind not as a complete anillysis Addltlonnl informatIOn 'Ith r('Speet to any SCLlltltLes ,equcst on day to daY,ml,Nar3ko',' '-

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