Viewing Month: July 1984

Tabell’s Market Letter – July 06, 1984

Tabell’s Market Letter – July 06, 1984

Tabell's Market Letter - July 06, 1984
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,. TABELLS MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 924-9660 July 6, 1984 As almost everyone is aware, we celebrated. this week, the 20Sth anniversary of our nation's independence. More parochially, we also celebrated the anniversary of the July 3, 1884 publication of . the Customer's Afternoon Letter. For those who missed the Wall Street Journal artlCle on the subject, -w – that publication was the enterprise- ofwo- geriUemen-nameij'!.Dow and Jones, and-thnssuein questiOn-was — -0— the first to publish an average of various stocks. That average has been maintained, more or less con- tinuously, ever since, so this week, in effect, saw the 100th blrthday of the Dow-Jones Industrial Average. That first ur-Dow-Jones. instructively. contained 11 stocks, nine of which were railroads and most of which Bubaequently went bankrupt. The average has been able to maintain continuity and rele- vance over the years through periodic sUbstitutions. although, as is proper for a venerable institution, the authorities at Dow-Jones are reluctant to make wholesale change. We thought, however, we would celebrate the birthday by offering those authorities some — admlttedly gratuitous — advice on brinsing the average up-to-date. To this end, we suggest six stocks currently m the average be replaced by others as outlined below. The way to view an average of only 30 stocks, it seems to us. is to view each stock as a proxy for the broad industrial category to which it belongs. To do this, we classified the 30 Dow stocks into 16 such broad categories based on Standard & Poor's Industrial groups and compared the weight for each of the 16 categories to its weight in the S & P 400. We did not mean to imply, in this exercise, any Itsuperiorityll of the S & P average. However, since it is capital weighted, it is a fair proxy for the importance of each category to the American economy. The final column of the table below shows the ratio of the Dow-Jones Industrlal weight to the S & P weight, and the table is ranked in order of these ratios. IndustrIal Catesor StOCKS In DJIA Z Wht – DJIA I W,ht – SIP 400 RatIo Contw'rs – lletal and Glass AC,OJ 6,46 0,55 11.75 Steel 1U11nl(f1ll & Metals – MiscellaneolJs BS,X M,N 3,25 0,65 5,00 3.42 1.C2 3,35 A,tural H'fhlner Ihscellar,eous Industrial & HIgh Tech.) AHRLD,T,n.,HHM 0,54 15.15 0,27 7.78 12.,9050 – PC.h..ea.lieeaLlLsoIreCshte.J1oCQOulcsts- Hlseellaneous PPO,UK 37..616 2\4';.,0121.-11,,'\97.0,7 -1 r;Moo-I)iJfdl (Uee, ElI'IIenl 8rI J HI 145 fFioeorodspIacOether Cons,,, (2) AHB,GF,PG UTX 122.,5796 120.,4143 1.26 1.06 Drus I nOi.lt.1 SUP. hes RetaIl HR 7.12 6.93 1,03 5,1 5,12 5.24 0,9B COIiPuters & BUSlnl!SS EQUIPment 011 IBM CHV,XON,TX B.34 9173 B,61 19,37 0,75 0,44 FInancIal (1) Autos,Aut Parts,TrucKsITlres AEX 2.24 (2) Food,Brewers,Soft DrIoKs,CosmetlcsrSoapsrTobacco It is worth noting that 24 of the 30 stocks in the Dow re in the top 133 S & P 500 issues. There then intrudes a gap, and six Dow stocks find themselves in the lower half of the 500. (All subse- quent numbers in parentheses refer to the ranking in the 500.) The six are International Harvester (448), Bethlehem Steel (311), Inco (290), American Can (284), Owens-Illinois (273), and Woolworth (267). The most overweighted group, as the table shows is obviously, Containers, and it would appear appropriate that American Can and Owens-Illinois be removed from the Dow. The next is Steel, and the smaller of the two companies, Bethlehem Steel, could, it seems to us, be appropriately deleted. Third is the Aluminum-Metal category and it woula seem to us sensible that Inco one of the six smaller companies go. The same reasomng would apply to International Harvester. The next most overweighted groups are the Chemical and Miscellaneous Industrlal categories. Furthermore, Allied Corp., stilI partially a chemical company, is in the latter category. It would thus seem that either it or Union Carbide, the smaller of the two chemicals, would be a potential deletion candidate. It is suggested above that a total of six stocks be dropped. What might be six appropriate re- placements Paradoxically, the only drastically underweighted group in the Dow is Oils and the average, which has three oil stocks already, appears to need another one. Ou suggestion would be Chlt'mberer (9) in the related oil-well equipment field, but Standard Oil of Indiana. (6) or Atlantic Richfield -(13 ( or domestic flavor) would also be appropriate. For our other suggestions. we examined industrial categories' not now contained- in the DJIA. Two Electronics categories constitute 2.92 of the 500, with none of the nine issues currently in the Dow. Hewlett-Packard (18) the largest, could appropriately be added. Many of today's industrial companies have been grouped together in Conghnerates, 2.39 of tlie S & P. Tennero (47) is the largest of these. Publishing constitutes 2.11 of the S & P. It would be chauvinistic for Dow-Jones (104) to in- clude itself in its own average, but it could go with Dun & Bradstreet (82) or Gannett (86). Two per- cent of the S & P is taken up by four groups generally imolved with consumer activity outside the home. McDonalds (61) is the largest company in this category. Finally, 1. 38 of the 500 is accounted for by a broad group of 21 companies generally associated with machinery. Caterpillar Tractor (80) would be a sensible new member of the thirty. Dow-Jones Industrials (1200 p.m.) 1115.95 S & P Composite.(1200 p.m.) 152.13 Cumulative Index (7/5/84) 1873.05 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. No stalemnt or expression of Oplnton or any other matter herein contained IS or IS to be deemed to be, directly or lndl'ectly an oller or the SoliCitation of an offer \0 buyor sell any securJ\y referred \001 menlloned The matter IS presented merely for lhe convenience of the subSCriber While we believe Ihe sources 01 our Informal Ion to be reliable, we In noway represent Or guarantee the accuracy thereof nor 01 the statements made herein Any action to be taken by Ihe sUbSCflber should be based on hiS own Inveshgatlon and Informal Ion DelafIeld, Harvey, labell Inc. as a corporatron and Its officers or employe('S, may now nave, or may later take, positions or trades In respect to any securrhes mentfoned In thfS or any future f55ue, and sucil posftlon may be dtflerent from any views OW or hereaUer efpressed In thiS or any other Issue Delafield Harvey. Tabell Inc which IS registered With the SECas an Investment adlsor, may give advice to ItS Investment adVISOry and olhe t'tstomers Independentty 01 any slalements made In thiS or In any other lssue Furlher information on any securltv menlloned herein IS available on request

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Tabell’s Market Letter – July 13, 1984

Tabell’s Market Letter – July 13, 1984

Tabell's Market Letter - July 13, 1984
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— TABELL'S MARKET LETTER – 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9249660 July 13, 1984 With the market declining during most of this week, the phrase a test of lows began to be hel,lrd with-1l1ol!OtQnol!.s. lows-to- test ,- and, for trheigsl!f!o!'tbi!eYt''i1eTChaeS'eu-s;-ethoefret-hiiiis\iSct1!hchaev,eEoifXicsofuerdsea, siimdpelwiaesystTheraredianrge previous -rafig- ,- '!his, indeed, has been the fact. For 33 trading days, since May 29, the Dow has held between a closing high of 1134.28 (July 3) and 1086.90 (June 15). Previously, it had held for 61 days, from February 22 through May 18, in an area bounded by 1186.56 and 1130.55. Trading ranges, in other words, have characterized most of 1984 so far. We attempted, this week, to examine the historical implications of such ranges. For such an examination it is necessary, first, to formulate a precise definition of a trading range. Our defini- tion was that such a range existed at any time when the high and low of the Dow for the prior 30 days had been within approximately 5 (log difference .05) of each other. A scan of stock-market history from 1926 to date revealed that there had been 262 such periods. The most recent two, of course, occurred this year, the earlier one lasting for 44 days. This was by no means a record. The Dow held in a 16-point range between 142.96 and 159.01 for 176 days between July 17, 1944 and February 19, 1945. More recently, it held in such a range for 102 days between February and August, 1972. The first point that became apparent from the scan was that such ranges seemed to be characteristic of bull-market, rather than bear-market, periods. For example, there have been 125 occurrences since 1958. Only 30 occurred during periods historically defined as bear markets. Expressing this same phenomenon with more rigor, one can state that only 85 of the 262 occurrences occurred when the Dow, at its average price for the trading range, was down from its level of 100 days previous. Of those, only 30 occurred when it was down more than 5. Of those 30 periods, only 15 lasted 10 days or longer. Those 15 occurrences are listed below. Start Date ———– Jul 17 1940 Aus 1 1940 Mar 22 1941 Ha, .1.3 1941 Mar .O 1948 Sep . ;,2 1969 Ap r ,,2.6 1973 Ap r 2,9 1977 Ma, 31 1977 Sep 22 1977 Dec 16 1977 Mar 23 1978 Dec .14 1978 Dec ,21 1979 Mar i,1 1984 Tradins D. J. I A. End Date Da'5 HHlh Low Averaser;'t, ———– ——- ——- ——- Jul 29 1940 11 123.15 121. 64 122.31 Aus 29 1940 25 127.26 121.28 125.01 Apr 16 1941 21 124.65 118.59 121.92 Jun 9 1941 23 120.16 115.73 116.96 Mar 24 1948 13 173.66 165.39 169.16 Oct 20 1969 35 839.23 802.20 823.21 Ma, 11 1973 12 956.58 921.21 938.18 Ma, 26 1977 20 943.44 903.24 929.09 Aus 5 1977 47 929.70 886.00 909.81 Oct 10 1977 13 851.96 834.72 840.90 Jan 5 1978 13 831.17 804.92 819.41 Apr 13 1978 15 775.21 751.04 762.38 Jan 4 1979 14 826.14 787.51 805.90 Jan 11 1980 14 858.96 820.31 839.93 Ma, 18 1984 44 1186.56 1130.55 1158.65 100 Das DJIA ——- 130.03 130.57 125.96 124.42 183.06 765.05 955.90 814.80 830.39 742.72 840.61 895.79 822.16 858.70 11 Later 7- Chs u … 6.31 4.44 3.32 6.38 8.22 -7.07 1.89 -12.30 -8.73 -11 .68 2.59 17.50 2.02 2.24 11' The table above also includes, for the 14 previous occurrences, the level of the Dow 100 days after the end of the trading range. It will be noted that the Dow was higher in 10 of 14 instances. Interestingly, three of the cases where the Dow declined following the trading range occurred during the 1976-1978 bear market. a rather unique historical phenomenon, best remembered for its selectivity. That market, in many ways was similar to the present one, except that. at that time, quality stockS leclined with secondary stocks holding up, while the precise reverse has been true over the past year. .' . The table would seem to suggest the likelihood that the Dow will be above 1158.65 (lb\3 hun- dred trading days after May 18, in other words on August 26. Were the worst case in the table (April-May, 1977) to be duplicated, it might be down 12.3 from that level, which translates to 1016. AWT rs ANTHONY W. TAB ELL DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrials (1200 p.m.) 1107.55 S & P Composite (1200 p.m.) 150.77 Cumulative Index (7/12/84) 1838.05 No statement or eKpresslon of opInion or any other matter herem contained IS, or IS 10 be deemed 10 be, directly or indirectly, an oller or the solicitation of an offer to buy or sell any security referred to Of mentioned The matter IS presented merolyfof the convenience of the subscnber While we believe the sources 0/ ourm/ormatlon to be reliable. we in no way represent orguaranlee Ihe accuracy lhereof nor of the slatemenls made herem Any action to be laken by the subscriber should be based on hiS own Investigation and information Dela/lela, Harvey, labell Inc, as a corporal Ion and ItS officers or employees may now have, or may later lake, positions or trades 10 respect to any secuntles mentioned In this or any future Issue, and such posilion may be dllferenl from anY'lews now or hereafter expressed In thiS or any other Issue Delafield, Harvey, label! Inc, which IS registered Wl\t1 the SECas an Investment adVisor, may give advice to Its mvestmenl adVisory and other customers mdependently of any statements made In thiS or In any other Issue Further Information on any security menfloned herein IS available on request

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Tabell’s Market Letter – July 20, 1984

Tabell’s Market Letter – July 20, 1984

Tabell's Market Letter - July 20, 1984
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\ TABELL'S MARKET LETTER . 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 …,. ' MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9249660 July 20, 1984 In case we needed to be reminded, the preemptmg of this week's television prime time by the .–such'Democratic NatioriaJ. ConventiOri'hfgl1lightea'1ne-filcf .thata-pFeSiaenHal.Cllinpaign nas begun a – '' period should be a good one for the stock market, which, on average, has advanced 6.24 between mid- July and election day in the last 14 election years. The market, as it so often does, however, is refus- ing to behave according to form and is once more testing its June low. A clue as to the reason for this may have been offered, inadvertently, by Governor Mario Cuomo in the course of his assigned partisan task of flailing the opposition in the Democratic keynote speech. Governor Cuomo said, Ask the Republican investment bankers on Wall Street what they think the chances of this recovery being permanent are …. they'll say that they are appalled and frightened by the President's deficit …Ask those Republican investment bankers what they expect the rate of interest to be a year from now … you'll learn from them what they predict for the inflation rate a year from now be- cause of the deficit. Governor Cuomo might also have asked, although perhaps inappropriately at a Democratic convention, why the stock market has been going down since last January. What the Governor was suggesting, it seems to us, is that the financial community and the Re- publican party (the two terms are not totally synonymous) find themselves somewhat uncomfortable with current trends m the economy, especially the largest deficit in U. S. history. It could also be asked whether the Governor — and Walter Mondale in his acceptance speech — found themselves uncomfort- able with rhetoric which, at least in part, could have been written for Alf Landon in 1936. This role reversal on the subject of the deficit seems to be a source of embarrassment for both sides. In our view, what is at issue here is the success or failure of supply-side economics. The as- sessment is complicated by the fact that there is, first of all, some question as to whether supply-side economics has even been tried, secondly, some doubt as to whether, to the extent that it has been tried, it is responsible for those positive economic trends that have emerged, and, thirdly, some question as to whether it may have produced an ephemeral success presaging disaster further down the road. This last, of course, is the posture the Democrats are likely to adopt in running against it. .. The RepubIIgans.,.-irt Dalla!Lal!!onthfI'omQwwm. of cO.\lI'Se…..giy.e….lliLan.el1tir.elyJliffeI'enLview. We'-will certainly hear at that convention that' the unemployment rate has been reduced from IOn to under 8, that real gross national product has shown one of Its sharpest expansions in history, and that the mflation rate has been reduced from 15 a year before President Reagon took office to the 4-5 range tOday. We will probably hear less about the deficit than we heard this week. The centerpiece of the Reagan program of four years ago was, of course, the tax cut, enacted in the face of a deficit that, even then, was mounting precipitously. This may have been the only real supply-side move of the administration, and it relied on the real, rather than theoretical, validity of the Laffer Curve, which tells us that, at a certain point, tax reduction will stimulate economic activity and produce increased tax revenues. The tax cut was coupled, it is not certain whether by accident or by design, with a period of fairly severe monetary stringency. The Democrats have already claimed that the results are a disaster, and the Republicans will undoubtedly trumpet its success. The truth is that the results are mixed, and the jury is still out — hence the uncertainty of financial markets. It is hard to fault the performance of the GNP, inflation, and unemployment figures mentioned above. It is, however, possible to attribute them to a pure-1930's Keynsian model rather than new sup- ply-side discoveries, and convincing data can be produced in support of this thesis. The recovery has, on the record, been supported by the sort of resurgent consumer demand which Lord Keynes told us 50 years ago such a deficit would produce, and has featured little increased savings despite record-high interest rates. It is also arguable that the reduction in inflation was bought with the most severe reces- sion since the 30's. Meanwhile the defbit continues. Or does it Governor Cuomo in his speech mentioned a deficit of 300 billion. There has never been such a deficit. It is a projection. Almost all news reports refer to projections, despite the fact that the hist- orical record of accuracy for such projections is a joke. The current deficit on a six-month annualized basis, is around 180 billion. For one glorious month, it was down to an annualized 60 billion. It is the supply-side contention that increased tax revenues from an expanding economy will reduce, not in- crease this figure. This contention has been neither proven or disproven by events. It is t furthermore, the conventional wisdom that continued economic expansion, especially at recent totally-surprising rates, must produce renewed inflation. Possibly, but it has not yet happened. Meanwhile, financial markets continue to express uncertainty. Interest rates are rising, stock prices are going nowhere, and savings stubbornly refuse to increase. Renewed inflation and lor a sharply escalating actual deficit would suggest that the market's fears are real. On the other hand, should the expansion continue. inflation remain low and J above all, actual deficits decline, the market could come to believe, rightly or wrongly in Reaganomics. The results thereof could be spectacular. AWT rs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dow-Jones Industrials (12 00 p. m.) 1102.36 S & P Composite (12 00 p.m.) 150.51 Cumulative Index (7/19/84) 1820 97 No statement or expression of opinion or any other matter herein contained IS or Is 10 be deamed to be, dlrec1ly or Indirectly, an oHer or the sohcltallon 01 an oller to buyor sell any secunty referred to or menltoned The matter Is presented merely for the convemence of the subSCriber While we bellcve the sources 01 our mformatlon to be reliable, we In no way represent or guarantee the accuracy thereot nor 01 the statements made herem Any action to be laken by the subscriber should be based on hiS own Investigation and Information Delafield, Harvey, Tabett Inc, as a corporation and its oftlcers or employMs, may now have, or may latcr tal-e, positions or trades Ir\ respect to any secuntles mentioned In this or any tutme Issue and stith POSition may be dllterent from anyvlCws nowor hetealler e)'pressed In thiS or any other Issue Delafield Harvey Tabelt Inc, which is registered With the SEC as an Investment adVisor, may give adVice 10 lIs Investment adVISOry and other customers Independently of an.y statements made In thiS or In any other Issue Funher mformaUonon any seCUrltv mentioned herem IS avattable on request

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Tabell’s Market Letter – July 27, 1984

Tabell’s Market Letter – July 27, 1984

Tabell's Market Letter - July 27, 1984
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'. TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 9249660 July 27, 1984 It is difficult to find a great many good things to say about last week's stock-market action. It is tru thl't Illednesday and TllUrsdaY..l9th-teittuI'ed.!!Ig!I'lrlltely,,,,tro!tgaJ.licarr.Yil1gUIe.Dowc Jones Industrials 'up-a total' of 2Tpoints for the'two days. However.' there- was little -to differenti 0 ate these attempts, either in terms of breadth or volume, from their many predecessors of the past six months. Moreover. they did not occur from the sort of deep oversold condition which might tempt one to view them with a bit more seriousness. At this point, if the short-term market prog- nosis is to improve, it will have to do so via a process of the market's proving itself, developing more in the way of demonstrated upside vitality than it has been able to do so far. This dearth of positive technical action can hardly be said to be a new phenomenon. Indeed, it has been the rule ever since January and, to a lesser extent, for six months before that. As long ago as June 17, 1983, the Dow reached an intTa-day high of 1260.72 and the Standard & POOl'S a peak of 172.76. Both indicators were to make new highs, but only marginal ones, after that, the peak for the Dow coming in late November, and for the S & P some six weeks earlier, in mid-Octo- bel'. These highs were again approached in January for both averages, after which the market headed due south, reaching a new low this week of 1086.57 on a closing basis for the Dow. Where does all this leave us At this week's closing bottom the Dow was down 15. 59 from its January 29 high, with the S & P down 14.38. In simplest terms, we have a market which has been going down, certainly for most of this year, and, in terms of momentum, since last June or for over 13 months. A market downtrend has, unarguably, been taking place. However, one phrase, the ab- sence of which readers will have noted in this particular publication, is the term bear market. Our colleagues have been far less bashful. Many are using the phrase today and are tempering their occasional bullish opinions by qualifying them as forecasts of rallies in a bear market. It is certainly possible that they are correct. The possibility of bear-market conditions exists on any day that the market fails JOI1lke,a new high. This, as.the Dowis concerned, has been true since last November. ' If one is going to wave the phrase bear market around indiscriminately, however, he would do well to define just precisely what it is he is talking about. As far as defining bull and bear markets is concerned, this is not always that easy. Our own preference is to use the terms exclu- sively within a major-cycle framework. As we have repeatedly demonstrated, it is possible, without stretching the data too much, to go back to the beginning of this century and separate market act- ion into a series of cycles, the bottoms of which have tended to be pretty close to four years apart. Between the two lows of each of these cycles there has, by definition, been a peak, and the period between that peak and the subsequent low can, in our view, appropriately be called a cycle bear market. This procedure is not without its difficulties. For example, it forces one to call the period January 5, 1953-September 14, 1953 a bear market, despite the fact that the Dow was down barely 13, considerably less than it has already declined this year, This is quite simply because it is the only period that effectively separates the eight years between 1949 and 1957 into two separate cycles. By contrast, between January 5, 1960 and October 25, 1960 the Dow was down some 17.42, a much greater decline than that of 1953 and slightly greater than the one we have seen to date. It is dif- ficult, however, to call this a bear market. The market spent the next 14 months in a 30 advance that brought the average well above the point where the decline started. The real bear market then ensued in the first half of 1962. Concerning the present major-market cycle, there are only a couple of things which are known with any degree of certainty. The first of these is that its beginning low occurred on August 12, 1982. It is also highly likely that its terminating low will occur at some date fairly well out in the future, sometime in 1986 being the most logical expectation. If we are to posit a hIgh on Novem- ber 29, 1983, we would have a cycle that spent less than a third of its total lifespan in an expansion phase. There are historical precedents for this but not many of them. Another possibility which would validate the present bear-market thesis would be that the entire cycle will turn out to be contracted in length to two years or a bit more, with the declining phase actually having begun in November and to end fairly shortly. Again, there are a few, but very few, historical precedents for an attenuated cycle of this nature. It is for the above reasons we have taken the calculated risk, for the past six months, of refusing to call the obviously weak stock market we have been seeing a bear market. It is a risk which may prove to be ill-advised, but we will stick with it for the time being. AWTrs Dow-Jones Industrials (12 00 p.m.) S & P Composite (1200 p.m.) Cumulative Index (7/26/84) 1113.18 150.25 1794.40 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC, No sla\(menl or eopresslon 01 oplmon or any other matter herein contained IS, or IS to be deemed 10 be, directly or Ifldlrectly. an ofter or the soliCitation of an offer to buy or sell any security referred loor montloned The malter IS presenled merelv forthe conv(!menceof the subScriber While we believe the sources of our Informatton to be reliable weln no way represent or guaranleethe accuracy thereof nor of the statements made herein Any aCllon to be taken by the subscriber should be based on hiS own investigation and information Delafield, Harvey, Tabell Inc, as a corporatIOn and Its officers or employees may now have, or may later taKe, poSitions or trades In respect to any securilles mentioned 10 thiS Of any future ISSue and such pOSt!lon may be different Itom any views now or hereafter expressed In thiS or any other Issue Delafield Harvey, Tabelt Inc, which Is registered With Ihe SEC as an investment advisor, may gIVe advice to its Investment adVISOry and other customers mdependently of any statements made In thiS or In any 0lherlS5ue Further mformation on any security mentioned herein IS available on reQuest

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